National Income and Output: Measure and Analyze Economic Performance

Question 1

Which of the following is excluded from the direct calculation of Gross Domestic Product (GDP)?

Accepted Answer

Gross Domestic Income (GDI)

Answer

Consumer spending

Answer

Government spending

Answer

Net exports (exports - imports)

Question 2

Which of the following is excluded from the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Transfer payments

Answer

Consumption spending

Answer

Government spending

Answer

Net exports

Question 3

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

Accepted Answer

Imports

Answer

Consumption spending

Answer

Investment spending

Answer

Government spending

Question 4

Which factor primarily determines the position and slope of the short-run aggregate supply curve?

Accepted Answer

Labor force size and productivity

Answer

Technological advancements

Answer

Capital stock size

Answer

Expectation of future price levels

Question 5

What is the central tenet of the Keynesian multiplier?

Accepted Answer

Government spending increases lead to a larger proportional increase in national income.

Answer

Government spending decreases lead to a smaller proportional decrease in national income.

Answer

Consumer spending increases lead to a smaller proportional increase in national income.

Answer

Consumer spending decreases lead to a larger proportional decrease in national income.

Question 6

Which objective is the primary focus of monetary policy in the United States?

Accepted Answer

Maintaining stable price levels

Answer

Achieving full employment

Answer

Promoting sustainable economic growth

Answer

Minimizing inflation

Question 7

Which of the following is a potential disadvantage of economic growth?

Accepted Answer

Widening wealth disparities

Answer

Higher standards of living

Answer

Increased job opportunities

Answer

Boosted productivity

Question 8

What is the nature of the relationship between economic growth and environmental sustainability?

Accepted Answer

Economic growth and environmental sustainability can coexist in a balanced manner.

Answer

Economic growth necessarily leads to environmental degradation.

Answer

Environmental sustainability inevitably hinders economic growth.

Answer

None of the above accurately describes their relationship.

Question 9

Which of the following is the most widely recognized and commonly used indicator of the overall performance of a country's economy?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Gross National Product (GNP)

Answer

Net Domestic Product (NDP)

Answer

Net National Product (NNP)

Question 10

What is the key distinction between Gross Domestic Product (GDP) and Gross National Product (GNP)?

Accepted Answer

GDP excludes income earned by citizens abroad, whereas GNP includes it.

Answer

GDP includes income earned by citizens abroad, whereas GNP does not.

Answer

Both GDP and GNP include income earned by citizens abroad.

Answer

Neither GDP nor GNP includes income earned by citizens abroad.

Question 11

Economic growth is best defined as:

Accepted Answer

A sustained increase in a country's real Gross Domestic Product (GDP) over time.

Answer

A decrease in a country's unemployment rate.

Answer

An increase in a country's inflation rate.

Answer

A fall in a country's exchange rate.

Question 12

Which of the following is a component of Gross National Income (GNI)?

Accepted Answer

Net income earned from abroad

Answer

Consumption

Answer

Investment

Answer

Government spending

Question 13

Gross Domestic Product (GDP) measures the total value of:

Accepted Answer

Goods and services produced within a country

Answer

Income earned by residents of a country

Answer

Income earned by businesses in a country

Answer

Goods and services consumed within a country

Question 14

Which of the following is a potential drawback of economic growth?

Accepted Answer

Environmental degradation

Answer

Increased standard of living

Answer

Reduced unemployment

Answer

Technological advancement

Question 15

The Consumer Price Index (CPI) measures the average price level of:

Accepted Answer

A basket of goods and services consumed by households

Answer

All goods and services produced in a country

Answer

Consumer goods only

Answer

The entire economy

Question 16

The Phillips Curve represents:

Accepted Answer

A trade-off between inflation and unemployment

Answer

A relationship between inflation and consumer confidence

Answer

A positive correlation between economic growth and environmental sustainability

Answer

A negative relationship between interest rates and unemployment

Question 17

Monetary policy is primarily the responsibility of:

Accepted Answer

The Federal Reserve

Answer

The Treasury Department

Answer

The President

Answer

The Congress

Question 18

Economic growth is influenced by a range of factors. Which of the following is generally NOT considered a major contributor to sustained economic growth?

Accepted Answer

Increased military expenditure

Answer

Technological innovation

Answer

Human capital development

Answer

Natural resource abundance

Question 19

How can understanding GDP, unemployment, and inflation help businesses make smarter choices about what to produce and how to price it?

Accepted Answer

By tracking GDP growth to find opportunities to improve productivity and allocate resources effectively.

Accepted Answer

By using unemployment data to predict changes in consumer demand and adjust production levels.

Accepted Answer

By adjusting pricing strategies in response to inflation to maintain profitability.

Answer

By ignoring these indicators and focusing only on internal business data.

Question 20

Which economic concept measures the total value of all final goods and services produced within a nation's borders during a specific period?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Gross National Income (GNI)

Answer

Net Domestic Product (NDP)

Answer

National Income (NI)

Question 21

What is the key difference between Gross Domestic Product (GDP) and Gross National Income (GNI)?

Accepted Answer

GDP includes income earned by domestic residents only, while GNI also includes income earned by foreign residents.

Answer

GNI includes income earned by domestic residents only, while GDP also includes income earned by foreign residents.

Answer

GDP includes only final goods and services, while GNI includes intermediate goods and services.

Answer

GNI includes only final goods and services, while GDP includes intermediate goods and services.

Question 22

Which of the following is NOT included in consumer spending as a component of GDP?

Accepted Answer

Business investments

Answer

Durable goods

Answer

Non-durable goods

Answer

Services

Question 23

When calculating GDP using the income approach, which type of income is excluded?

Accepted Answer

Government transfer payments

Answer

Wages and salaries

Answer

Corporate profits

Answer

Net interest income

Question 24

The measure of the weighted average price change for a basket of goods and services over time is known as:

Accepted Answer

Consumer Price Index (CPI)

Answer

Inflation Rate

Answer

Purchasing Power Parity (PPP)

Answer

Exchange Rate

Question 25

Which economic condition refers to a period in which an economy operates below its potential output?

Accepted Answer

Recession

Answer

Expansion

Answer

Depression

Answer

Peak

Question 26

In general, a decrease in the unemployment rate tends to lead to:

Accepted Answer

Increased wages

Answer

Higher unemployment insurance claims

Answer

Reduced labor force participation

Answer

Decreased consumer spending

Question 27

Which government policy primarily aims to stimulate economic growth through changes in government spending and taxation?

Accepted Answer

Fiscal policy

Answer

Monetary policy

Answer

Supply-side policy

Answer

Industrial policy

Question 28

The relationship between the inflation rate and the unemployment rate is often depicted through the:

Accepted Answer

Phillips Curve

Answer

Okun's Law

Answer

Laffer Curve

Answer

Lorenz Curve

Question 29

Which economic growth strategy emphasizes the development of human capital, research, and technological advancements?

Accepted Answer

Intensive growth

Answer

Extensive growth

Answer

Export-led growth

Answer

Import substitution

Question 30

What is the primary purpose of using a GDP deflator?

Accepted Answer

To adjust GDP for changes in the price level

Answer

To measure economic growth over time

Answer

To compare GDP across different countries

Answer

To calculate the rate of inflation

Question 31

Which measure reflects a country's standard of living?

Accepted Answer

GDP per capita

Answer

Unemployment rate

Answer

Government spending per citizen

Answer

Inflation rate

Question 32

What primary role does the government play in managing national income and output?

Accepted Answer

Implementing fiscal and monetary policies to stabilize the economy

Answer

Setting prices and wages

Answer

Directly investing in businesses

Question 33

Which of the following is defined as the market value of all final goods and services produced in an economy within a specific time period and is the most comprehensive measure of economic activity?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Gross National Income (GNI)

Answer

National Wealth

Answer

Personal Income

Question 34

Which of the following is explicitly excluded from the calculation of GDP?

Accepted Answer

Government transfer payments

Answer

Government purchases

Answer

Investment spending

Answer

Consumption expenditure

Question 35

Economic growth refers to:

Accepted Answer

A sustained increase in the real GDP of an economy over a period of time.

Answer

A rise in the value of the stock market.

Answer

A decrease in the unemployment rate.

Answer

An increase in the inflation rate.

Question 36

What is the fundamental difference between GDP and GNP?

Accepted Answer

GNP includes income earned by residents from abroad, while GDP does not.

Answer

GNP is calculated using constant prices, while GDP uses current prices.

Answer

GDP includes government transfer payments, while GNP does not.

Question 37

Which of the following would result in an increase in net exports?

Accepted Answer

An increase in exports or a decrease in imports

Answer

An increase in imports or a decrease in exports

Answer

A decrease in both exports and imports

Answer

An increase in both exports and imports

Question 38

The multiplier effect refers to:

Accepted Answer

The cumulative impact of an initial change in spending on aggregate output.

Answer

The relationship between government spending and economic growth.

Answer

The effect of inflation on the value of currency.

Question 39

The primary role of government in economic growth is to:

Accepted Answer

Promote stability, efficiency, and equity

Answer

Stimulate economic growth at any cost

Answer

Minimize government intervention in the economy

Answer

Control the economy through central planning

Question 40

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

Accepted Answer

Transfer payments

Answer

Government spending

Answer

Personal consumption

Answer

Gross private domestic investment

Question 41

Which of the following is widely recognized as a key determinant of economic growth?

Accepted Answer

Technological progress

Answer

Interest rates

Answer

Government regulations

Question 42

According to the Phillips curve, what is the relationship between inflation and unemployment in the short run?

Accepted Answer

There is an inverse relationship between inflation and unemployment in the short run.

Answer

Inflation and unemployment are unrelated.

Answer

There is a positive relationship between inflation and unemployment in the long run.

Question 43

Which of the following is a key benefit of using Gross National Product (GNP) as a measure of economic well-being?

Accepted Answer

It includes income earned by domestic factors of production abroad.

Answer

It is not affected by foreign exchange rates.

Answer

It is easier to calculate than GDP.

Question 44

What is the key difference between extensive and intensive economic growth?

Accepted Answer

Extensive growth relies on increasing inputs, while intensive growth focuses on improving productivity.

Answer

Extensive growth is always faster than intensive growth.

Question 45

What is the fundamental concept behind the multiplier effect?

Accepted Answer

An increase in spending leads to a larger increase in GDP.

Answer

The multiplier effect is the same for all economies.

Answer

A decrease in taxes leads to a decrease in GDP.

Question 46

Which of the following is a valid criticism of using per capita income as a measure of economic well-being?

Accepted Answer

It does not take into account income inequality.

Answer

It is only useful for comparing countries with similar population sizes.

Answer

It is not affected by inflation.

Answer

It is difficult to calculate accurately.

Question 47

What is the primary role of the government in managing national income and output?

Accepted Answer

The government can use fiscal and monetary policies to stabilize the economy.

Answer

The government should always intervene in the economy to ensure full employment.

Answer

The government has no role in managing national income and output.

Question 48

Which of the following is NOT a component of GDP calculated using the expenditure approach?

Accepted Answer

Government transfer payments

Answer

Investment spending

Answer

Consumer spending

Answer

Government purchases of goods and services

Question 49

A U.S. company manufactures cars in Mexico and sells them in Canada. This production would be included in which country's GDP?

Accepted Answer

Mexico

Answer

None of the above

Answer

Canada

Answer

United States

Question 50

Assuming all other factors remain constant, an increase in the price level will most likely lead to a(n):

Accepted Answer

Increase in nominal GDP

Answer

Decrease in nominal GDP

Answer

Decrease in real GDP

Answer

Increase in real GDP

Question 51

Which of the following would be considered an investment component of GDP?

Accepted Answer

Construction of a new factory

Answer

Purchase of a used car

Answer

Purchase of a new house by a household

Answer

Purchase of government bonds

Question 52

The key difference between GDP and GNP is:

Accepted Answer

GNP includes income earned by residents abroad, while GDP includes income earned by non-residents within the country.

Answer

GDP includes government spending, while GNP does not.

Question 53

Which of the following is considered a leading economic indicator, often used to predict future economic activity?

Accepted Answer

New building permits

Answer

Consumer price index

Answer

Unemployment rate

Answer

Inflation rate

Question 54

A business cycle is characterized by:

Accepted Answer

Periods of economic expansion and contraction.

Answer

Steady growth in GDP over time.

Answer

A constant inflation rate.

Question 55

The difference between the value of output produced and the value of inputs used in production is known as:

Accepted Answer

Value added

Answer

Gross domestic product

Answer

National income

Answer

Per capita income