National Income and Output: Interactive Learning Quizzes for Economics Students

Question 1

How does an increase in aggregate demand impact the equilibrium levels of output and price?

Accepted Answer

Increases both equilibrium output and equilibrium price.

Answer

Increases equilibrium price and decreases equilibrium output.

Answer

Decreases equilibrium price and increases equilibrium output.

Answer

Has no effect on equilibrium output or price.

Question 2

How does an increase in consumer spending influence the equilibrium level of output?

Accepted Answer

Increase in equilibrium output

Answer

Decrease in equilibrium output

Answer

No change in equilibrium output

Answer

Shift in aggregate supply curve

Question 3

Which of the following is **NOT** a component of Gross Domestic Product (GDP)?

Accepted Answer

Foreign aid received

Answer

Consumer spending

Answer

Business investment

Answer

Government purchases

Question 4

Which formula is used to calculate GDP using the expenditure approach?

Accepted Answer

GDP = Consumption + Investment + Government spending + (Exports - Imports)

Answer

GDP = Consumption + Investment - Government spending + Imports

Answer

GDP = Consumption - Investment + Government spending + Imports

Answer

GDP = Consumption + Investment + Government spending + Exports

Question 5

What is the typical impact of an increase in government spending on the equilibrium level of output?

Accepted Answer

Increase

Answer

Decrease

Answer

Remain unchanged

Answer

Unpredictable

Question 6

Which of the following is **NOT** a benefit of using GDP as a measure of economic performance?

Accepted Answer

Indicates the well-being of citizens

Answer

Provides a comprehensive view of economic activity

Answer

Easy to calculate and compare over time

Answer

Captures all types of production

Question 7

Which of the following is **not** included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Imports

Answer

Consumption spending

Answer

Government spending

Answer

Investment spending

Question 8

The expenditure approach to calculating GDP measures the total value of:

Accepted Answer

Goods and services bought and sold within a country's borders during a specific period

Answer

Goods and services produced within a country's borders during a specific period

Answer

Investment made within a country's borders during a specific period

Answer

Government spending within a country's borders during a specific period

Question 9

Which of the following is a measure of the average change in prices for goods and services over time?

Accepted Answer

Inflation rate

Answer

Unemployment rate

Answer

Interest rate

Answer

Exchange rate

Question 10

According to Keynesian economics, what is a primary cause of economic recessions?

Accepted Answer

Insufficient aggregate demand

Answer

Excessive aggregate supply

Answer

Government budget surpluses

Answer

High interest rates

Question 11

The Phillips curve shows the relationship between:

Accepted Answer

Inflation and unemployment

Answer

Inflation and interest rates

Answer

Unemployment and economic growth

Answer

Interest rates and economic growth

Question 12

The multiplier effect refers to:

Accepted Answer

The increase in economic output that results from an initial increase in spending

Answer

The decrease in economic output that results from an initial decrease in spending

Answer

The relationship between inflation and unemployment

Answer

The government's ability to control interest rates

Question 13

Which of the following is NOT a component of Gross Domestic Product (GDP)?

Accepted Answer

International trade

Answer

Consumption spending

Answer

Investment spending

Answer

Government spending

Question 14

The expenditure approach to calculating GDP measures:

Accepted Answer

Total spending on final goods and services produced within a country's borders

Answer

Total income earned by factors of production

Answer

Total value of intermediate goods and services produced

Answer

Total savings by households and businesses

Question 15

An increase in government spending will:

Accepted Answer

Shift the aggregate demand curve to the right

Answer

Shift the aggregate supply curve to the right

Answer

Decrease the equilibrium price level

Answer

Have no effect on the equilibrium quantity

Question 16

What is the difference between real GDP and nominal GDP?

Accepted Answer

Real GDP adjusts for inflation, while nominal GDP does not

Answer

Nominal GDP adjusts for inflation, while real GDP does not

Answer

They are the same thing

Answer

Real GDP is always higher than nominal GDP

Question 17

What is the relationship between economic growth and unemployment?

Accepted Answer

The relationship can vary depending on economic conditions

Answer

Economic growth typically leads to decreased unemployment

Answer

Economic growth typically leads to increased unemployment

Answer

There is no relationship between economic growth and unemployment

Question 18

Precise Question: Which item is not included in the components of Gross Domestic Product (GDP)?

Accepted Answer

Precise Option: Imports

Answer

Precise Option: Consumption

Answer

Precise Option: Investment

Answer

Precise Option: Government spending

Question 19

Precise Question: Which method of GDP calculation measures the total worth of finished products and services generated in an economy?

Accepted Answer

Precise Option: Expenditure approach

Answer

Precise Option: Income approach

Answer

Precise Option: Value-added approach

Answer

Precise Option: Output approach

Question 20

Precise Question: Aggregate demand is best defined as:

Accepted Answer

Precise Option: The overall need for commodities and services within an economy

Answer

Precise Option: The overall supply of commodities and services within an economy

Answer

Precise Option: The gap between aggregate demand and aggregate supply

Answer

Precise Option: The federal government's fiscal policy stance

Question 21

Precise Question: The equilibrium level of production is attained when:

Accepted Answer

Precise Option: Aggregate demand is equal to aggregate supply

Answer

Precise Option: Aggregate demand surpasses aggregate supply

Answer

Precise Option: Aggregate demand falls short of aggregate supply

Answer

Precise Option: None of the above

Question 22

Precise Question: Which of the following is a limitation of utilizing GDP as an indicator of economic well-being?

Accepted Answer

Precise Option: Both (A) and (B)

Answer

Precise Option: It excludes non-market activities

Answer

Precise Option: It overlooks the distribution of income

Answer

Precise Option: It merely gauges the circulation of commodities and services

Question 23

Precise Question: The economic production that can be achieved with full employment of resources is known as:

Accepted Answer

Precise Option: Potential GDP

Answer

Precise Option: Real GDP

Answer

Precise Option: Nominal GDP

Answer

Precise Option: Disposable GDP

Question 24

Which of the following does NOT affect the position of the aggregate supply curve?

Accepted Answer

The expected future price of a good

Answer

Technological advancements

Answer

Government regulations

Answer

The price of raw materials

Question 25

The expenditure approach to calculating GDP involves summing up:

Accepted Answer

Consumption, investment, government purchases, and net exports

Answer

Wages, salaries, profits, and interest

Answer

The value of all final goods and services produced

Answer

The value of all intermediate goods and services produced

Question 26

If the aggregate demand curve shifts to the right, what is the likely impact on real GDP?

Accepted Answer

Increase

Answer

Decrease

Answer

No change

Answer

Uncertain

Question 27

The difference between real GDP and potential GDP represents:

Accepted Answer

Output gap

Answer

Inflationary gap

Answer

Deflationary gap

Answer

Stagflationary gap

Question 28

Which of the following is a potential consequence of a persistent negative output gap?

Accepted Answer

Unemployment

Answer

Inflation

Answer

Economic growth

Answer

Improved living standards

Question 29

The Phillips curve illustrates the relationship between:

Accepted Answer

Inflation and unemployment

Answer

Inflation and interest rates

Answer

Unemployment and GDP

Answer

GDP and interest rates

Question 30

Which method is NOT commonly used to calculate Gross Domestic Product (GDP)?

Accepted Answer

Balance of payments approach

Answer

Income approach

Answer

Expenditure approach

Answer

Production approach

Question 31

Clear Question: Describe the expenditure approach for calculating GDP.

Accepted Answer

Summing up the final expenditures for goods and services

Answer

Estimating the added value at each production stage

Answer

Calculating the difference between total income and consumption

Answer

Using market prices to measure the output of all industries

Question 32

Clear Question: Explain the equilibrium relationship between aggregate demand and aggregate supply.

Accepted Answer

Aggregate demand equals aggregate supply at the equilibrium output level

Answer

Aggregate demand always exceeds aggregate supply

Answer

Aggregate supply always exceeds aggregate demand

Answer

There is no relationship between aggregate demand and aggregate supply

Question 33

Clear Question: How does a recession impact the unemployment rate?

Accepted Answer

It leads to an increase in the unemployment rate

Answer

It leads to a decrease in the unemployment rate

Answer

It has no impact on the unemployment rate

Answer

The impact is uncertain

Question 34

Clear Question: Explain the distinction between nominal GDP and real GDP.

Accepted Answer

Nominal GDP measures output at current prices while real GDP measures output at constant prices

Answer

Real GDP measures output at current prices while nominal GDP measures output at constant prices

Answer

There is no difference between nominal and real GDP

Answer

Nominal GDP measures output at constant prices while real GDP measures output at historical prices

Question 35

Which monetary policy action usually results in lower interest rates?

Accepted Answer

Sell government bonds

Answer

Increase reserve requirements

Answer

Increase the discount rate

Question 36

What is the **main** factor that determines the amount of money people spend on goods and services?

Accepted Answer

Disposable income

Answer

Interest rates

Answer

Government spending

Answer

Inflation rate

Question 37

Which of the following is considered an investment expenditure?

Accepted Answer

Building a new factory

Answer

Buying a house that already exists

Answer

Buying a new car for personal use

Question 38

Which of the following is NOT a direct component of aggregate demand or aggregate supply that can be influenced by international trade?

Accepted Answer

Exchange rates

Answer

Consumption

Answer

Investment

Answer

Government spending

Question 39

Which factor has the most significant influence on the level of aggregate demand in an economy?

Accepted Answer

Government spending

Answer

Interest rates

Answer

Inflation

Answer

Foreign exchange rates

Question 40

Which of the following is **not** included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Transfer payments

Answer

Consumption

Answer

Government spending

Answer

Investment

Question 41

Aggregate demand represents the total planned spending in an economy, which includes:

Accepted Answer

Consumption, investment, government spending, and net exports

Answer

Consumption, investment, and net exports

Answer

Investment, government spending, and net exports

Question 42

Which of the following factors would cause a **leftward** shift in the aggregate supply curve?

Accepted Answer

Increase in input costs

Answer

Decrease in interest rates

Answer

Increase in labor supply

Answer

Technological advancements

Question 43

Equilibrium in an economy occurs when:

Accepted Answer

Aggregate demand equals aggregate supply

Answer

Aggregate demand exceeds aggregate supply

Answer

Aggregate demand is less than aggregate supply

Question 44

Which of the following will **not** cause an increase in the level of potential output?

Accepted Answer

Increase in unemployment rate

Answer

Technological advancements

Answer

Increase in capital stock

Answer

Increase in labor productivity

Question 45

The multiplier effect refers to the:

Accepted Answer

Amplification of the initial change in spending throughout the economy

Answer

Time lag between the initial change in spending and the final change in output

Answer

Reduction of the initial change in spending throughout the economy

Answer

Decrease in consumer confidence

Question 46

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Social security payments

Answer

Consumer spending

Answer

Investment spending

Answer

Government spending

Question 47

What is the primary difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP includes inflation, while real GDP adjusts for inflation.

Answer

Real GDP includes inflation, while nominal GDP does not.

Answer

Nominal GDP is used for international comparisons, while real GDP is used for domestic comparisons.

Question 48

What is the relationship between aggregate demand and aggregate supply?

Accepted Answer

They determine the equilibrium level of output and price in the economy.

Answer

Aggregate demand is always greater than aggregate supply.

Answer

Aggregate demand and aggregate supply are independent of each other.

Question 49

What is the likely effect of a decrease in aggregate supply on output and price?

Accepted Answer

Output will decrease, and price will increase.

Answer

Both output and price will remain unchanged.

Answer

Output will increase, and price will decrease.

Question 50

Which of the following is a potential policy measure to increase aggregate supply?

Accepted Answer

Reducing taxes on businesses

Answer

Raising interest rates

Answer

Imposing price controls

Answer

Decreasing government spending

Question 51

What is the primary distinction between a recession and a depression?

Accepted Answer

A depression is a more severe and prolonged economic downturn than a recession.

Answer

Recessions and depressions are characterized by the same severity and duration.

Answer

A recession is a more severe and prolonged economic downturn than a depression.

Question 52

What is a key benefit of using GDP per capita as an economic indicator?

Accepted Answer

It enables comparisons of economic well-being across countries with varying population sizes.

Answer

It provides insight into the distribution of income within a country.

Answer

It is a more precise measure of economic growth over time.

Question 53

Which of the following is a limitation of GDP as a measure of economic well-being?

Accepted Answer

It does not account for non-market activities, environmental factors, or income inequality.

Answer

It is too complex to calculate accurately.

Answer

It only measures the production of physical goods.