National Income Accounting: Master the Fundamentals of Economic Performance Analysis

Question 1

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

Accepted Answer

Government spending on education

Answer

Business investment

Answer

Exports

Answer

Household consumption

Question 2

Which measure is used to track price level changes over time?

Accepted Answer

Consumer Price Index (CPI)

Answer

Gross National Product (GNP)

Answer

Balance of payments

Answer

Unemployment rate

Question 3

Calculate Gross National Product (GNP) using the following formula:

Accepted Answer

GDP + Net factor income from abroad

Answer

GDP - Government expenditure

Answer

GDP - Depreciation

Answer

GDP / Population

Question 4

Which type of unemployment refers to short-term joblessness due to factors such as job transitions?

Accepted Answer

Frictional unemployment

Answer

Inflation rate

Answer

GDP growth

Question 5

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

Real GDP measures total value of produced goods, while nominal GDP measures total value of sold goods.

Question 6

Identify a limitation of using GDP to measure economic well-being.

Accepted Answer

GDP does not account for income distribution.

Answer

GDP is easily calculated.

Answer

GDP is a precise measure.

Question 7

How is economic growth measured?

Accepted Answer

Percentage change in GDP over a specific time period.

Answer

Economic growth is a measure of GDP.

Answer

GDP is a direct measure of economic growth.

Question 8

Which of the following can significantly impact the unemployment rate?

Accepted Answer

Technological advancements

Answer

Inflation rate

Answer

Exchange rate

Answer

GDP growth

Question 9

What is the primary purpose of using GDP deflators?

Accepted Answer

To account for inflation in GDP calculations.

Answer

To measure changes in the price level

Answer

To predict future GDP growth

Answer

To compare GDP across countries

Question 10

What is the difference between nominal and real GDP?

Accepted Answer

Nominal GDP is expressed in current prices while real GDP is expressed in constant prices, adjusting for changes in the price level over time.

Answer

Nominal GDP measures the value of output only in a base year while real GDP measures the value of output in the current year.

Answer

Real GDP measures output per capita while nominal GDP measures total output.

Question 11

The Consumer Price Index (CPI) is a common measure of what economic variable?

Accepted Answer

Inflation

Answer

Unemployment

Answer

Balance of payments

Answer

Economic growth

Question 12

Which of the following formulas correctly calculates the unemployment rate?

Accepted Answer

(Number of unemployed / Labour force) * 100

Answer

(Number of unemployed / Number of employed) * 100

Answer

(Number of unemployed / Total population) * 100

Answer

(Number of employed / Labour force) * 100

Question 13

Technological advancements can have what effect on an economy?

Accepted Answer

Economic growth

Answer

Political instability

Answer

Recession

Answer

High inflation

Question 14

What does the balance of payments account for?

Accepted Answer

The value of all economic transactions between a country and the rest of the world over a specific period, typically a year.

Answer

The level of public debt

Answer

The total money supply in circulation

Question 15

The Keynesian model assumes that:

Accepted Answer

Aggregate demand is the primary driver of economic output.

Answer

The economy operates at full employment at all times.

Answer

Cost-push factors are the primary cause of inflation.

Question 16

Expansionary fiscal policy is most effective at:

Accepted Answer

Reducing unemployment

Answer

Reducing inflation

Answer

Increasing government debt

Answer

Slowing economic growth

Question 17

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

Accepted Answer

Interest payments on government debt

Answer

Government spending on infrastructure

Answer

Investment in new machinery

Answer

Household spending on consumer goods

Question 18

How does Gross National Product (GNP) differ from Gross Domestic Product (GDP)?

Accepted Answer

GNP includes income earned by domestic residents abroad, while GDP only includes income earned within the country's borders.

Answer

GNP is adjusted for inflation, while GDP is not.

Answer

GNP is calculated on a quarterly basis, while GDP is calculated annually.

Answer

GNP includes government spending, while GDP does not.

Question 19

The natural rate of unemployment refers to:

Accepted Answer

The unemployment rate that exists when the economy is operating at its potential output, with only frictional and structural unemployment present.

Answer

The unemployment rate that is caused by cyclical fluctuations in the economy.

Answer

The unemployment rate that is specifically related to technological advancements.

Answer

The lowest possible unemployment rate that can be achieved in an economy.

Question 20

Which of the following is a fiscal policy tool used to stimulate economic activity?

Accepted Answer

Increasing government spending

Answer

Increasing taxes

Answer

Raising interest rates

Answer

Reducing the money supply

Question 21

The multiplier effect describes:

Accepted Answer

The process where an initial change in spending triggers a larger change in overall economic activity.

Answer

The relationship between inflation and unemployment.

Answer

The rate at which prices increase in an economy.

Answer

The impact of government borrowing on interest rates.

Question 22

The Lorenz curve graphically depicts:

Accepted Answer

The distribution of income within a society.

Answer

The balance of payments for a country.

Answer

The level of economic growth over time.

Answer

The relationship between inflation and unemployment.

Question 23

Which of the following is a characteristic of a progressive tax system?

Accepted Answer

Higher earners pay a larger proportion of their income in taxes.

Answer

Lower earners pay a larger proportion of their income in taxes.

Answer

All earners pay the same percentage of their income in taxes.

Question 24

The government budget deficit is calculated as:

Accepted Answer

The difference between government spending and government revenue.

Answer

The amount of money the government owes to its creditors.

Answer

The difference between exports and imports.