National Income and Output: Quizzes and Learning Materials

Question 1

What is a key difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP uses current prices while real GDP uses constant prices.

Answer

Real GDP is always higher than nominal GDP.

Answer

Nominal GDP is a better indicator of economic growth.

Answer

There is no difference between nominal GDP and real GDP.

Question 2

What is the primary purpose of using a GDP deflator to calculate real GDP?

Accepted Answer

To adjust for the effects of inflation

Answer

To compare GDP across different countries

Answer

To account for changes in population

Answer

To include government spending

Question 3

Which of the following is NOT a component participating in the circular flow of income?

Accepted Answer

Bureau of Economic Analysis (BEA)

Answer

Households

Answer

Firms

Answer

Government

Question 4

What is the concept known as the multiplier effect?

Accepted Answer

The expansion in GDP resulting from an initial increase in spending.

Answer

The decline in GDP resulting from an initial reduction in spending.

Answer

The impact of inflation on economic growth.

Answer

The impact of government fiscal policy on economic activity.

Question 5

Which of the following is a component of gross national income (GNI)?

Accepted Answer

Net factor income from abroad

Answer

Depreciation

Answer

Indirect taxes

Answer

Subsidies

Question 6

In the circular flow of income, households primarily supply which factor of production?

Accepted Answer

Labor

Answer

Land

Answer

Capital

Answer

Entrepreneurship

Question 7

The term 'nominal GDP' refers to:

Accepted Answer

GDP measured in current prices

Answer

GDP measured in constant prices

Answer

GDP adjusted for inflation

Answer

GDP excluding government spending

Question 8

Which of the following is a fiscal measure employed by the government to influence economic activity?

Accepted Answer

Adjusting tax rates

Answer

Adjusting interest rates

Answer

Privatizing state-owned industries

Answer

Issuing new currency

Question 9

The equilibrium level of output occurs when:

Accepted Answer

Aggregate demand equals aggregate supply

Answer

Aggregate supply equals potential output

Answer

Unemployment is zero

Answer

Inflation is stable

Question 10

Gross National Product (GNP) differs from Gross Domestic Product (GDP) because GNP includes:

Accepted Answer

Income earned by domestic residents abroad

Answer

Income earned by foreign residents domestically

Answer

Government transfer payments

Answer

Investment in capital stock

Question 11

The circular flow of income demonstrates:

Accepted Answer

Income flow between various sectors of the economy

Answer

Production and consumption of goods and services

Answer

Impact of government policies on the economy

Answer

The achievement of economic growth

Question 12

Which of the following is NOT a method employed to calculate GDP?

Accepted Answer

Net worth approach

Answer

Expenditure approach

Answer

Income approach

Answer

Output approach

Question 13

The process of utilizing inputs like labor and capital to create products and services is referred to as:

Accepted Answer

Production

Answer

Consumption

Answer

Distribution

Answer

Investment

Question 14

Which of the following factors would NOT contribute to an increase in real GDP?

Accepted Answer

Increase in inflation

Answer

Increased production of goods and services

Answer

Reduction in unemployment

Answer

Improvement in technology

Question 15

Which of the following is a type of economic growth that is accompanied by an increase in the general price level?

Accepted Answer

Inflationary growth

Answer

Real growth

Answer

Nominal growth

Answer

Sustainable growth

Question 16

Which of the following is NOT a method used to calculate Gross Domestic Product (GDP)?

Accepted Answer

Human Development Index approach

Answer

Expenditure approach

Answer

Income approach

Answer

Production approach

Question 17

Which component of GDP measures the value of goods and services purchased by households for their own consumption?

Accepted Answer

Consumption

Answer

Investment

Answer

Government spending

Answer

Net exports

Question 18

Real GDP per capita is a measure of:

Accepted Answer

The output produced by an average person in a country

Answer

The total income earned by an average person in a country

Answer

The cost of living in a country relative to other countries

Answer

The percentage of the population that is unemployed

Question 19

Which of the following would cause an increase in nominal GDP?

Accepted Answer

A rise in the overall price level of goods and services

Answer

An increase in the production of goods and services

Answer

A fall in the unemployment rate

Answer

A depreciation of the domestic currency against foreign currencies

Question 20

Which economic indicator would be most relevant in assessing the standard of living in a country?

Accepted Answer

GDP per capita

Answer

Consumer Price Index

Answer

Unemployment rate

Answer

Exchange rate

Question 21

What is the primary objective of macroeconomic policies?

Accepted Answer

To manage the overall level of economic activity in a country

Answer

To control the prices of specific goods and services

Answer

To regulate the financial markets

Answer

To set interest rates

Question 22

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

Accepted Answer

Financial approach

Answer

Output approach

Answer

Income approach

Answer

Aggregate expenditure approach

Question 23

Which function is NOT fulfilled by the circular flow of income model?

Accepted Answer

Predicting future economic growth.

Answer

Illustrating the connections between economic sectors.

Answer

Explaining income flow within an economy.

Answer

Measuring the size of an economy.

Question 24

Define the Phillips curve.

Accepted Answer

A graph showing the inverse relationship between inflation and unemployment.

Answer

A graph showing the inverse relationship between GDP and unemployment.

Answer

A graph showing the direct relationship between inflation and interest rates.

Answer

A graph showing the direct relationship between GDP and interest rates.

Question 25

Which is NOT a criticism of GDP as a measure of economic well-being?

Accepted Answer

Provides a comprehensive measure of economic activity.

Answer

Excludes non-market activities.

Answer

Does not consider income distribution.

Answer

Ignores environmental factors.

Question 26

Identify the potential drawback of rapid economic growth that does NOT appear on the list below:

Accepted Answer

Improved healthcare access

Answer

Environmental degradation

Answer

Income inequality

Answer

Social disparities

Question 27

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

Accepted Answer

Transfer payments

Answer

Net exports

Answer

Government spending

Answer

Investment

Question 28

Which measure of national income and output includes an adjustment for depreciation?

Accepted Answer

Net national product (NNP)

Answer

Gross national product (GNP)

Answer

Gross domestic product (GDP)

Answer

Personal income

Question 29

The value of all final goods and services produced within a country's borders during a specific period is measured by:

Accepted Answer

GDP

Answer

Personal income

Answer

GNP

Answer

NNP

Question 30

Which of the following would result in an increase in GDP?

Accepted Answer

An increase in consumer spending

Answer

A fall in exports

Answer

A decrease in government spending

Answer

A rise in unemployment

Question 31

The difference between GDP and GNP is primarily due to:

Accepted Answer

Net factor income from abroad

Answer

Investment

Answer

Government spending

Question 32

The method of calculating GDP that uses data on expenditures made by various sectors of the economy is known as the:

Accepted Answer

Expenditure approach

Answer

Value-added approach

Answer

Production approach

Answer

Income approach

Question 33

A country with a high per capita GDP is generally associated with:

Accepted Answer

A higher standard of living

Answer

A more equal distribution of income

Answer

A more stable economy

Answer

A lower unemployment rate

Question 34

What is the distinction between nominal GDP and real GDP?

Accepted Answer

Nominal GDP reflects the value of goods and services at current prices, while real GDP adjusts for inflation to show the change in output over time.

Answer

Real GDP reflects the value of goods and services at current prices, while nominal GDP adjusts for inflation.

Answer

Nominal GDP measures total output per capita, while real GDP measures total output.

Question 35

What is the multiplier effect in economics?

Accepted Answer

The cumulative increase in GDP resulting from a change in investment or government spending.

Answer

The cumulative decrease in GDP resulting from a change in investment or government spending.

Answer

The increase in inflation resulting from a change in investment or government spending.

Question 36

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

Accepted Answer

It does not account for non-market activities, such as leisure time and household production.

Answer

It is only available on an annual basis.

Answer

It is not adjusted for inflation.

Answer

It is only available on a quarterly basis.

Question 37

What does the circular flow of income model illustrate?

Accepted Answer

The flow of money and resources through different sectors of an economy.

Answer

The allocation of resources in an economy.

Answer

The movement of goods and services through an economy.

Question 38

Which of the following is a widely used measure of the price level in an economy?

Accepted Answer

Consumer Price Index (CPI)

Answer

Unemployment rate

Answer

Gross Domestic Product (GDP)

Answer

Interest rate

Question 39

What is the primary role of the Bank of England in the UK economy?

Accepted Answer

To set interest rates and regulate the money supply.

Answer

To fix exchange rates and oversee the value of the pound sterling.

Answer

To set wage rates and manage inflation.

Answer

To determine fiscal policy and control government expenditure.

Question 40

What is the general relationship between GDP and employment?

Accepted Answer

A positive correlation, meaning higher GDP typically leads to higher employment.

Answer

A negative correlation, meaning higher GDP typically leads to lower employment.

Answer

No correlation, GDP and employment are not related.

Question 41

Which of the following factors are considered the most influential in determining a country's level of GDP?

Accepted Answer

Capital, labor, and technology

Answer

Education, healthcare, and infrastructure

Answer

Culture, history, and geography

Answer

Natural resources, government policies, and foreign trade

Question 42

In the expenditure approach to calculating GDP, which of the following is NOT a component?

Accepted Answer

Government Transfers

Answer

Government purchases of goods and services

Answer

Consumer spending on durable goods

Answer

Investment in new factories

Question 43

If an economy's GDP increases from £1 trillion to £1.2 trillion, what is the percentage change?

Accepted Answer

20%

Answer

15%

Answer

10%

Answer

25%

Question 44

GDP may be underestimated in countries with a significant:

Accepted Answer

Informal Economy

Answer

Trade Surplus

Answer

Government Debt

Answer

High-skilled Labor Force

Question 45

Which scenario would increase the circular flow of income?

Accepted Answer

Increased business investment

Answer

A decrease in consumer spending

Answer

An increase in interest rates

Question 46

The difference between exports and imports is termed:

Accepted Answer

Net Exports

Answer

Current Account

Answer

Gross Domestic Product

Answer

Balance of Trade

Question 47

Significant government spending on infrastructure projects would likely:

Accepted Answer

Increase GDP

Answer

Unpredictably affect GDP

Answer

Decrease GDP

Answer

Have no effect on GDP

Question 48

National income refers to:

Accepted Answer

The total value of goods and services produced within a country in a given period

Answer

The amount of money in circulation

Answer

The total amount saved in a country

Question 49

GDP per capita is most useful for assessing:

Accepted Answer

Standard of living

Answer

Level of government debt

Answer

Level of inflation

Answer

Level of unemployment

Question 50

Calculating GDP using the income approach involves summing:

Accepted Answer

Factor incomes earned in an economy

Answer

Value of all final goods and services

Answer

Consumer spending

Answer

Net exports