National Income Accounting Quizzes - Master Economics Concepts

Question 1

What is the term for the unemployment rate that exists even in a healthy economy?

Accepted Answer

Natural rate of unemployment

Answer

Seasonal unemployment

Answer

Technological unemployment

Answer

Frictional unemployment

Question 2

Which of the following is the most precise definition of inflation?

Accepted Answer

A sustained increase in the general price level of goods and services in an economy

Answer

A rise in the cost of living

Answer

An increase in the prices of specific goods or services

Answer

A decrease in the purchasing power of money

Question 3

What measure is used to assess the overall price level of goods and services in an economy?

Accepted Answer

Consumer Price Index (CPI)

Answer

Real GDP

Answer

Nominal GDP

Answer

Producer Price Index (PPI)

Question 4

Explain the difference between GDP and GNP.

Accepted Answer

GDP includes only domestic production, while GNP includes production by both domestic and foreign-owned factors.

Answer

GNP includes only domestic production, while GDP includes production by both domestic and foreign-owned factors.

Answer

There is no difference between GDP and GNP.

Answer

GDP measures production, GNP measures income.

Question 5

Which of these elements comprises the largest component of aggregate demand?

Accepted Answer

Consumption spending

Answer

Investment spending

Answer

Government spending

Answer

Exports less Imports

Question 6

Describe the relationship between inflation and unemployment.

Accepted Answer

Complex relationship: the impact of inflation on unemployment depends on other economic factors.

Answer

Positive correlation: rising inflation leads to decreasing unemployment.

Answer

Negative correlation: rising inflation leads to increasing unemployment.

Answer

No correlation: inflation and unemployment are unrelated.

Question 7

Describe the relationship between economic growth and unemployment.

Accepted Answer

The relationship is complex and influenced by other economic factors.

Answer

Economic growth always results in decreased unemployment.

Answer

Economic growth can lead to short-term increases in unemployment.

Answer

There is no relationship between economic growth and unemployment.

Question 8

Okun's Law describes the relationship between:

Accepted Answer

GDP growth and unemployment

Answer

Inflation and unemployment

Answer

GDP growth and inflation

Answer

Unemployment and labor force participation

Question 9

The concept of opportunity cost is relevant to national income accounting because it:

Accepted Answer

Highlights the trade-offs involved in producing different goods and services

Answer

Determines the absolute value of goods and services produced

Answer

Measures the amount of time spent producing goods and services

Answer

Ensures that all goods and services are produced efficiently

Question 10

How does a rise in consumer spending directly impact the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Boosts GDP

Answer

Reduces GDP

Answer

No effect on GDP

Answer

Uncertain impact on GDP due to other factors

Question 11

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

Accepted Answer

Income earned by domestic residents from foreign sources

Answer

Government spending on infrastructure

Answer

Exports of goods and services

Answer

Investment in new technology

Question 12

Which measure reflects the percentage change in the price level of a basket of goods and services over time?

Accepted Answer

Inflation

Answer

Unemployment rate

Answer

GDP growth rate

Answer

Interest rate

Question 13

The unemployment rate is calculated as the:

Accepted Answer

Ratio of unemployed individuals to the total labour force

Answer

Ratio of employed individuals to the total labour force

Answer

Difference between the labour force and the number of unemployed

Answer

Sum of the number of unemployed and employed individuals divided by the labour force

Question 14

Which of the following can lead to a decline in economic growth?

Accepted Answer

Economic recession

Answer

Increased investment spending

Answer

Technological innovation

Answer

Expansionary fiscal policy

Question 15

National Income and Product Accounts (NIPAs) serve primarily to:

Accepted Answer

Quantify the output produced within an economy

Answer

Measure the income distribution across society

Answer

Predict future economic performance

Answer

Provide a comprehensive analysis of economic activity

Question 16

Which measure represents real income adjusted for price changes?

Accepted Answer

Real GDP

Answer

Nominal GDP

Answer

Consumer Price Index

Answer

Producer Price Index

Question 17

The aggregate demand curve illustrates the relationship between:

Accepted Answer

Price level and real GDP

Answer

Interest rate and investment

Answer

Income level and consumption

Answer

Fiscal policy and monetary policy

Question 18

Which of the following is **not** a category of macroeconomic policy?

Accepted Answer

Microeconomic policy

Answer

Fiscal policy

Answer

Monetary policy

Answer

Supply-side policy

Question 19

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

Accepted Answer

Imports

Answer

Consumption expenditure

Answer

Gross investment

Answer

Government spending

Question 20

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

Accepted Answer

Includes income earned by domestic residents abroad

Answer

Excludes income earned by foreigners within the country

Answer

Is calculated using market prices

Answer

Measures the value of all final goods and services produced within a country

Question 21

The relationship between the unemployment rate and the labour force participation rate can be described as:

Accepted Answer

Positively or negatively related, depending on economic conditions

Answer

Always inversely related

Answer

Always positively related

Answer

Unrelated

Question 22

The multiplier effect in economics refers to:

Accepted Answer

The cumulative impact of changes in government spending or taxes on GDP

Answer

The tendency for inflation to increase over time

Answer

The relationship between unemployment and economic growth

Answer

The effect of exchange rates on trade

Question 23

The primary purpose of National Income Accounting is to:

Accepted Answer

Measure the size and growth of an economy

Answer

Monitor the distribution of income and wealth

Answer

Forecast future economic trends

Answer

Regulate the financial sector

Question 24

A fundamental assumption of Keynesian economics is that:

Accepted Answer

Aggregate demand is the primary determinant of economic output

Answer

Government intervention is crucial for economic stability

Answer

The economy will naturally self-correct in the long run

Answer

Inflation is the most pressing economic issue

Question 25

The relationship between economic growth and inflation is:

Accepted Answer

Can be positive or negative depending on economic conditions

Answer

Always positive

Answer

Always negative

Answer

Non-existent

Question 26

The difference between nominal GDP and real GDP is that:

Accepted Answer

Nominal GDP is measured in current prices, while real GDP is measured in constant prices, effectively eliminating the effect of inflation.

Answer

Real GDP is measured in current prices, while nominal GDP is measured in constant prices.

Question 27

Which of the following is a component of GDP?

Accepted Answer

Government spending on goods and services

Answer

Transfer payments from the government to individuals

Question 28

The consumer price index (CPI) measures:

Accepted Answer

The percentage change in the prices of a fixed basket of goods and services typically purchased by consumers over time.

Answer

The absolute change in the prices of a fixed basket of goods and services typically purchased by consumers over time.

Question 29

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

Accepted Answer

Government transfer payments

Answer

Government spending

Answer

Business investment

Answer

Consumer spending

Question 30

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

Accepted Answer

Consumer Price Index (CPI)

Answer

Unemployment rate

Answer

Gross Domestic Product (GDP)

Answer

Balance of payments

Question 31

The unemployment rate is defined as the percentage of the:

Accepted Answer

Labor force that is actively seeking employment but unable to find it

Answer

Total population that is of working age

Answer

Total workforce that is underemployed

Answer

Population that is employed

Question 32

Which of the following factors can contribute to an increase in the unemployment rate?

Accepted Answer

Technological advancements leading to job displacement

Answer

Increased government spending

Answer

Low interest rates

Answer

Rising consumer confidence

Question 33

Nominal GDP measures the value of goods and services produced in an economy using:

Accepted Answer

Current prices for goods and services

Answer

Only goods, not services

Answer

Prices adjusted for inflation

Answer

Only services, not goods

Question 34

A recession is typically defined as:

Accepted Answer

Two consecutive quarters of negative GDP growth

Answer

One quarter of negative GDP growth

Answer

Three consecutive quarters of positive GDP growth

Question 35

Which of the following is NOT one of the components used to calculate the Human Development Index (HDI)?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Life expectancy

Answer

Education level

Answer

Standard of living

Question 36

The balance of payments encompasses:

Accepted Answer

The inflows and outflows of goods, services, and capital across a country's borders

Answer

Only the inflows of goods and services

Answer

Only the outflows of goods and services

Question 37

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

Accepted Answer

Unemployment rate

Answer

Consumer spending

Answer

Government spending

Answer

Business investment

Question 38

Gross National Product (GNP) measures the value of all final goods and services produced by:

Accepted Answer

Domestic residents and citizens of a country, regardless of location

Answer

Domestic residents and citizens of a country, within its borders

Answer

Foreign residents and citizens of a country, regardless of location

Question 39

Which assumption is **NOT** used in the calculation of GDP?

Accepted Answer

All goods and services are valued at government-controlled prices.

Answer

All goods and services are valued at market prices.

Answer

All transactions are recorded in the national currency.

Question 40

Which term refers to a sustained increase in the general price level of goods and services over time?

Accepted Answer

Inflation

Answer

Unemployment

Answer

Deflation

Answer

Growth rate

Question 41

Which of the following is a potential consequence of sustained inflation?

Accepted Answer

Reduced purchasing power of money

Answer

Increased economic stability

Answer

Improved standard of living

Answer

Higher real interest rates

Question 42

Which measure indicates the percentage of the labor force that is actively searching for work?

Accepted Answer

Unemployment rate

Answer

GDP growth rate

Answer

Inflation rate

Answer

National income

Question 43

Cyclical unemployment primarily arises from:

Accepted Answer

Short-term economic fluctuations

Answer

Long-term structural changes

Question 44

Which of the following is **NOT** a potential negative impact of high unemployment?

Accepted Answer

Increased economic growth

Answer

Higher crime rates

Answer

Reduced tax revenue

Answer

Social unrest

Question 45

Government policies designed to reduce unemployment may include:

Accepted Answer

Fiscal stimulus and monetary easing

Answer

Reducing government spending and increasing the minimum wage

Answer

Deregulating industries and reducing subsidies

Answer

Raising taxes and increasing interest rates