GDP and Economic Growth: A Comprehensive Guide for Current Affairs

Question 1

Which of the following is NOT a component of GDP?

Accepted Answer

Household investments

Answer

Consumption spending

Answer

Government spending

Answer

Net exports

Question 2

GDP measures the total monetary value of:

Accepted Answer

Goods and services produced within a country's borders

Answer

Goods and services consumed within a country's borders

Answer

Goods and services imported and exported

Answer

Goods and services produced and consumed internationally

Question 3

Which sector of the UK economy typically contributes the most to GDP?

Accepted Answer

Tertiary sector (services)

Answer

Primary sector (agriculture and mining)

Answer

Secondary sector (manufacturing and construction)

Answer

Quaternary sector (information and communications)

Question 4

GDP per capita is a measure of:

Accepted Answer

Average income of a country's citizens

Answer

Total economic output of a country

Answer

Economic growth rate of a country

Answer

Inflation rate of a country

Question 5

How does GDP differ from Gross National Income (GNI)?

Accepted Answer

GNI includes income earned by foreign residents

Answer

GDP includes income earned by domestic residents

Answer

They are calculated using distinct methodologies

Answer

GDP and GNI measure the same economic concept

Question 6

What is the potential relationship between GDP and inflation?

Accepted Answer

The relationship between GDP and inflation depends on the underlying causes

Answer

GDP and inflation are directly correlated

Answer

GDP and inflation are inversely correlated

Answer

There is no relationship between GDP and inflation

Question 7

How can economic growth impact the environment?

Accepted Answer

Increased pollution, resource depletion, and environmental degradation

Answer

Improved energy efficiency, sustainable practices, and environmental protection

Answer

No impact on the environment

Answer

Economic growth always has a positive environmental impact

Question 8

What is the most comprehensive indicator of a country's economic activity?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Gross National Product (GNP)

Answer

National Income

Answer

Personal Income

Question 9

GDP growth measures:

Accepted Answer

Percentage change in the value of goods and services produced in an economy

Answer

Percentage change in the number of jobs created in an economy

Answer

Percentage change in the inflation rate

Answer

Percentage change in the unemployment rate

Question 10

In the UK, which sector typically contributes the largest share to GDP?

Accepted Answer

Services

Answer

Manufacturing

Answer

Agriculture

Answer

Construction

Question 11

How are GDP and economic growth related?

Accepted Answer

GDP measures economic growth

Answer

Economic growth measures GDP

Answer

GDP and economic growth are separate concepts

Answer

There is no relationship between GDP and economic growth

Question 12

Which of the following is **not** a component of GDP?

Accepted Answer

Net income

Answer

Government spending

Answer

Net exports

Answer

Private investment

Question 13

How does GDP growth typically affect employment rates?

Accepted Answer

Both A and B above

Answer

Higher GDP growth can lead to increased job opportunities.

Answer

Lower GDP growth can result in job losses.

Answer

GDP growth has no significant impact on employment.

Question 14

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

Accepted Answer

Real GDP accounts for inflation, while nominal GDP does not.

Answer

Nominal GDP accounts for inflation, while real GDP does not.

Answer

There is no significant difference between nominal and real GDP.

Answer

Real GDP is always higher than nominal GDP.

Question 15

Which of the following is **not** a limitation of using GDP as a measure of economic well-being?

Accepted Answer

GDP is a comprehensive measure of all economic activity.

Answer

GDP does not account for environmental externalities.

Answer

GDP does not measure the distribution of income.

Answer

GDP can be misleading during periods of high inflation.

Question 16

How does GDP growth typically affect the living standards of UK citizens?

Accepted Answer

Both A and B above

Answer

Higher GDP growth can lead to higher wages and improved public services.

Answer

Lower GDP growth can lead to job losses and reduced social services.

Answer

GDP growth has no significant impact on living standards.

Question 17

In the context of GDP, what does the acronym GNI stand for?

Accepted Answer

Gross National Income

Answer

Global National Income

Answer

Government National Income

Answer

Gross Non-Income

Question 18

How can technological advancements have both positive and negative impacts on GDP growth?

Accepted Answer

Increased productivity and the emergence of new industries, driving economic expansion.

Accepted Answer

Reduced demand for labor, potentially resulting in job losses and lower economic output.

Question 19

According to Okun's Law, how does a 1% increase in GDP growth typically affect the unemployment rate?

Accepted Answer

Decrease by about 2%

Answer

Decrease by less than 1%

Answer

Decrease by around 5%

Question 20

What is the typical impact of increased government spending on GDP?

Accepted Answer

Increases GDP

Answer

Decreases GDP

Answer

No impact on GDP

Answer

Depends on the type of government spending

Question 21

What is the key 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

There is no difference between real GDP and nominal GDP.

Answer

Real GDP measures GDP in current prices, while nominal GDP measures GDP in constant prices.

Question 22

What is the most common formula for calculating GDP?

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 23

How does increased government spending impact economic growth in the short term and long term?

Accepted Answer

Boosts short-term growth but hinders long-term growth by displacing private investment.

Answer

Enhances both short-term and long-term growth by stimulating private investment.

Answer

Reduces both short-term and long-term growth by decreasing overall demand.

Answer

Has no significant impact on economic growth in either the short term or long term.

Question 24

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

Accepted Answer

Foreign aid received

Answer

Consumption

Answer

Investment

Answer

Government spending

Question 25

GDP is a measure of the:

Accepted Answer

Total value of goods and services produced within a country's borders during a specific period

Answer

Rate of inflation within a country

Answer

Unemployment rate within a country

Answer

National debt of a country

Question 26

GDP is often used as an indicator of:

Accepted Answer

Economic health

Answer

Social development

Answer

Environmental sustainability

Answer

Political stability

Question 27

GDP and economic growth are related in which way?

Accepted Answer

GDP measures the absolute level of economic activity, while economic growth measures the percentage change in GDP over time

Answer

GDP and economic growth are the same concept

Answer

Economic growth measures the absolute level of economic activity, while GDP measures the percentage change in economic activity over time

Answer

There is no correlation between GDP and economic growth

Question 28

How is GDP typically measured?

Accepted Answer

By adding up the value of all final goods and services produced in a country

Answer

By subtracting the value of all imports from the value of all exports

Answer

By dividing the national income by the population

Answer

By multiplying the average wage by the number of people employed

Question 29

Which sector of the economy typically contributes the largest share to GDP in most developed countries?

Accepted Answer

Tertiary sector

Answer

Primary sector

Answer

Secondary sector

Answer

Quaternary sector

Question 30

GDP can be used to make comparisons between countries' economies.

Accepted Answer

True

Answer

False

Question 31

What is the primary reason for measuring Gross Domestic Product (GDP)?

Accepted Answer

To monitor economic growth and performance

Answer

To compare living standards between countries

Answer

To predict future economic conditions

Answer

To identify industries for government investment

Question 32

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

Accepted Answer

Increase in government spending on infrastructure

Answer

Decrease in consumer spending on durable goods

Answer

Fall in exports of domestically produced goods

Answer

Rise in the unemployment rate

Question 33

What is the term used to describe a consistent rise in GDP over an extended period?

Accepted Answer

Economic growth

Answer

Economic recession

Answer

Economic stagnation

Answer

Economic inflation

Question 34

Which of the following indicators suggests potential economic instability?

Accepted Answer

Rising unemployment levels

Answer

Consistently high GDP growth

Answer

Low and stable inflation rates

Answer

Favorable exchange rates

Question 35

If GDP growth significantly outpaces population growth, what is the likely outcome?

Accepted Answer

Improved living standards for citizens

Answer

Reduced unemployment rates

Answer

Lower government debt levels

Answer

Controlled inflation levels

Question 36

Which organization is responsible for calculating and publishing GDP data in the United Kingdom?

Accepted Answer

Office for National Statistics (ONS)

Answer

Bank of England

Answer

HM Treasury

Answer

Financial Conduct Authority

Question 37

How does economic growth impact unemployment?

Accepted Answer

It can have varying effects on unemployment

Answer

It consistently reduces unemployment

Answer

It consistently increases unemployment

Answer

It has no impact on unemployment

Question 38

Identify the short-term measure of economic growth:

Accepted Answer

GDP

Answer

GNI

Answer

GNP

Answer

CPI

Question 39

Which government policy regulates the money supply and interest rates?

Accepted Answer

Monetary policy

Answer

Fiscal policy

Answer

Trade policy

Answer

Industrial policy

Question 40

How does inflation potentially affect GDP?

Accepted Answer

It can have both positive and negative effects on GDP

Answer

It consistently increases GDP

Answer

It consistently decreases GDP

Answer

It has no impact on GDP

Question 41

Which factor has NOT played a significant role in shaping the historical trends and turning points in the UK's GDP and economic growth since the 20th century?

Accepted Answer

Environmental regulations

Answer

Government policies

Answer

Technological advancements

Answer

International trade

Question 42

How can GDP growth potentially exacerbate income inequality and wealth distribution in a country?

Accepted Answer

By widening the economic gap between the wealthy and the poor

Answer

By providing tax breaks to high-income earners

Answer

By increasing investment in education and healthcare for all citizens

Answer

By reducing living expenses for low-income households

Question 43

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

Accepted Answer

Earnings of foreign workers in the UK

Answer

Spending by households

Answer

Government spending

Answer

Value of goods and services produced

Question 44

A rise in GDP growth rate indicates that:

Accepted Answer

The economy is experiencing growth

Answer

The economy is shrinking

Answer

The economy is neither growing nor shrinking

Answer

The unemployment rate is increasing

Question 45

Which factor is most likely to contribute to an increase in GDP?

Accepted Answer

Increased consumer spending

Answer

Rising unemployment

Answer

Reduced exports

Answer

Decreased investments

Question 46

Gross Domestic Product (GDP) differs from Gross National Product (GNP) in that:

Accepted Answer

GDP measures the income of domestic residents, while GNP includes income earned abroad

Answer

GNP measures the income of foreign residents, while GDP includes income earned domestically

Answer

GDP includes the value of all goods and services produced, while GNP only includes those consumed domestically

Answer

GNP includes the value of all goods and services produced, while GDP only includes those consumed domestically

Question 47

GDP is primarily calculated by measuring:

Accepted Answer

The total value of goods and services produced within the UK

Answer

The total income earned by all individuals in the UK

Answer

The total taxes paid by individuals and businesses in the UK

Answer

The total profits made by businesses in the UK

Question 48

A GDP deflator of 1.10 indicates that:

Accepted Answer

Prices have increased by 10%

Answer

Prices have decreased by 10%

Answer

Inflation is running at 10%

Answer

GDP is growing at 10%

Question 49

Gross Domestic Product (GDP) measures:

Accepted Answer

The total value of goods and services produced in an economy in a given period.

Answer

The total amount of money in circulation in an economy in a given period.

Answer

The total income earned by citizens in an economy in a given period.

Question 50

Which of the following factors would lead to an increase in real GDP?

Accepted Answer

An increase in productivity

Answer

A rise in unemployment

Answer

A trade deficit

Answer

A decrease in investment

Question 51

What is the purpose of using GDP per capita?

Accepted Answer

To compare the living standards of different countries

Answer

To track the progress of economic growth over time

Answer

To measure the overall size of an economy

Question 52

What is the relationship between productivity and GDP growth?

Accepted Answer

Higher productivity leads to higher GDP growth.

Answer

Lower productivity leads to higher GDP growth.

Answer

GDP growth leads to higher productivity.

Answer

Productivity has no impact on GDP growth.

Question 53

Which of the following is a key indicator of economic growth?

Accepted Answer

Increase in employment rates

Answer

Stable exchange rate

Answer

Decrease in inflation

Answer

Balanced budget

Question 54

What is the potential impact of technological advancements on GDP?

Accepted Answer

Increased productivity and economic growth

Answer

Reduced unemployment

Answer

Slower GDP growth

Answer

Higher inflation