Economic Measurement: GDP, Inflation, Unemployment, and More

Question 1

GDP includes the total value of

Accepted Answer

all goods and services produced in an economy

Answer

only final goods and services

Answer

only intermediate goods and services

Answer

only government spending

Question 2

What does inflation measure?

Accepted Answer

The change in the general price level of goods and services

Answer

The change in the price of a specific good or service

Answer

The change in the value of money

Answer

The change in the cost of living

Question 3

Which of the following is a type of unemployment caused by technological advancements?

Accepted Answer

Structural unemployment

Answer

Frictional unemployment

Answer

Cyclical unemployment

Answer

Seasonal unemployment

Question 4

How is real GDP different from nominal GDP?

Accepted Answer

Real GDP excludes inflation, while nominal GDP includes inflation.

Answer

Nominal GDP excludes inflation, while real GDP includes inflation.

Answer

They are the same concept with different names.

Answer

There is no difference between real and nominal GDP.

Question 5

What is the goal of fiscal policy?

Accepted Answer

To influence the economy through government spending and taxation

Answer

To maintain price stability and control inflation

Answer

To promote economic growth and maximize employment

Answer

To ensure a fair distribution of income and wealth

Question 6

Define Gross Domestic Product (GDP).

Accepted Answer

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

Answer

A measure of the rate of inflation in an economy.

Answer

The percentage of the workforce that is unemployed.

Answer

An index that measures the change in prices of a basket of consumer goods.

Question 7

What is inflation?

Accepted Answer

A sustained increase in the general price level.

Answer

A sustained decrease in the general price level.

Answer

A temporary increase in the general price level.

Answer

A temporary decrease in the general price level.

Question 8

Which of the following is NOT a potential factor contributing to inflation?

Accepted Answer

Reduced demand for goods and services

Answer

Increased government spending

Answer

Increased money supply

Answer

Supply chain disruptions

Question 9

What is the primary purpose of measuring the unemployment rate?

Accepted Answer

To assess the health of the labour market

Answer

To determine the level of economic growth

Answer

To predict future inflation rates

Answer

To set interest rates

Question 10

Differentiate between nominal GDP and real GDP.

Accepted Answer

Nominal GDP is measured in current prices, while real GDP is measured in constant prices.

Answer

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

Answer

Nominal GDP includes all goods and services produced, while real GDP excludes some goods and services.

Answer

Real GDP includes all goods and services produced, while nominal GDP excludes some goods and services.

Question 11

Which inflation measure is primarily used by the Bank of England?

Accepted Answer

Consumer Price Index (CPI)

Answer

Retail Price Index (RPI)

Answer

Producer Price Index (PPI)

Answer

GDP Deflator

Question 12

Describe the difference between cyclical unemployment and structural unemployment.

Accepted Answer

Cyclical unemployment is caused by changes in economic conditions, while structural unemployment is caused by changes in technology.

Answer

Structural unemployment is caused by changes in economic conditions, while cyclical unemployment is caused by changes in technology.

Answer

Cyclical unemployment is temporary, while structural unemployment is permanent.

Answer

Structural unemployment is temporary, while cyclical unemployment is permanent.

Question 13

Which group of individuals is considered economically active?

Accepted Answer

Employed and unemployed individuals

Answer

Employed individuals only

Answer

Unemployed individuals only

Answer

Individuals within a specific age range

Question 14

How is inflation typically related to interest rates?

Accepted Answer

High inflation often leads to increased interest rates

Answer

High inflation often results in decreased interest rates

Answer

Inflation and interest rates are unrelated

Answer

Interest rates have no effect on inflation

Question 15

What is the key distinction between real GDP and nominal GDP?

Accepted Answer

Real GDP takes inflation into consideration, while nominal GDP does not

Answer

Nominal GDP incorporates inflation, whereas real GDP does not

Answer

Real GDP is always higher than nominal GDP

Answer

Nominal GDP is always higher than real GDP

Question 16

How does economic growth generally impact unemployment?

Accepted Answer

Economic growth tends to reduce unemployment

Answer

Economic growth tends to increase unemployment

Answer

Economic growth has no impact on unemployment

Answer

The impact of economic growth on unemployment is uncertain

Question 17

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

Financial asset transactions

Answer

Consumption expenditure

Answer

Government expenditure

Answer

Net exports

Question 18

The Consumer Price Index (CPI) measures the:

Accepted Answer

Change in the prices of a fixed basket of goods and services over time, reflecting the cost of living

Answer

Average price level of all goods and services in an economy

Answer

Change in the prices of all goods and services in an economy over time

Answer

Rate at which the general price level is increasing

Question 19

The unemployment rate is calculated as:

Accepted Answer

The number of unemployed people divided by the total labour force

Answer

The number of unemployed people divided by the total population

Answer

The number of unemployed people divided by the number of employed people

Answer

The number of people seeking work divided by the number of people in employment

Question 20

Which of the following is NOT a factor that can contribute to inflation?

Accepted Answer

Technological advancements that increase productivity

Answer

Increased demand for goods and services

Answer

Supply shocks, such as disruptions to production or distribution

Answer

Government borrowing

Question 21

The Phillips curve suggests a relationship between:

Accepted Answer

Inflation and unemployment

Answer

Inflation and economic growth

Answer

Unemployment and interest rates

Answer

Economic growth and government expenditure

Question 22

The concept of economic growth refers to:

Accepted Answer

An increase in the real value of goods and services produced in an economy over time, adjusted for inflation

Answer

An increase in the nominal value of goods and services produced in an economy over time, not adjusted for inflation

Answer

A decrease in the real value of goods and services produced in an economy over time, adjusted for inflation

Answer

A decrease in the nominal value of goods and services produced in an economy over time, not adjusted for inflation