Free Practice Quiz Question List

1 Measuring Economic Output Online Quiz Questions

Use this free practice quiz with 20 questions to review 1 Measuring Economic Output, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

The sale of a used car generally counts as new production in GDP because the car changes owners.

A
True
B
False

Choose one

1 point

A foreign-owned factory produces goods at a plant located in the United States. How is that production treated in U.S. GDP?

A
It is included because production takes place within U.S. borders.
B
It is excluded because the factory is foreign-owned.
C
It is included only if the factory sells its products to U.S. consumers.
D
It is excluded unless the factory's owners live in the United States.

Fill in the blank

1 point

Nominal GDP values production using the of the period being measured.

Choose one

1 point

In the expenditure identity for GDP, why are imports subtracted?

A
To remove spending by domestic consumers from the measure.
B
To exclude production that took place abroad.
C
To account for goods that were produced earlier and resold.
D
To make government purchases equal to exports.

Written response

1 point

In the GDP identity $GDP = C + I + G + (X - M)$ , which letter represents imports?

Choose one

1 point

An economist wants to compare the volume of production across two years when prices changed. Which measure is more useful for that comparison?

A
Nominal GDP, because it uses the prices of each period being compared.
B
Nominal GDP, because it counts only physical items rather than their value.
C
Real GDP, because it adjusts for price changes across periods.
D
Neither measure, because GDP cannot be compared across periods.

Fill in the blank

1 point

A bakery turns flour into bread that it sells to a customer. GDP counts the bread as the , rather than counting the flour separately as well.

Choose all

1 point

Select all activities that are generally included in GDP as production during the period.

A
A household buys a newly produced appliance made domestically.
B
A customer pays for a newly provided haircut at a business located within the country whose GDP is being measured.
C
A parent provides unpaid care for their own child at home.
D
A volunteer provides an unpaid service to a community group.

Choose one

1 point

A government provides a service without charging users a market price. How is this service generally treated in GDP?

A
It is excluded because it is not sold in a market.
B
It is included and often valued using its production costs.
C
It is included only if the government makes a profit.
D
It is counted only when households pay directly for the service.

True or false

1 point

An initial GDP estimate may be revised when more information becomes available.

A
True
B
False

Written response

1 point

Real GDP increases from $700$ to $735$ in the same units. Calculate the real GDP growth rate. Give your answer to the nearest whole percentage point.

Choose all

1 point

Select all accurate statements about what GDP can and cannot show about people’s lives.

A
A country's GDP can rise even if gains go mainly to a small share of its population.
B
GDP by itself directly measures residents' health and leisure.
C
GDP does not directly show whether output is distributed evenly.
D
GDP directly subtracts all environmental costs caused by production.

Open ended

1 point

A report says that a country's nominal GDP increased over the year. Explain why this alone does not prove that the volume of production increased, identify the measure that is more useful for comparing production over time, and state one reason that even an increase in measured production would not by itself prove that residents' well-being improved.

Choose one

1 point

A household buys shares of an existing company on a stock exchange. How is the share purchase itself treated in GDP?

A
It is counted as consumer spending because a household made the purchase.
B
It is counted as investment in productive assets because the buyer expects a return.
C
The purchase itself is not counted as production of a new good or service.
D
It is counted as government spending because it occurs in a financial market.

Choose one

1 point

A foreign-owned company produces goods at a factory located in the United States. Which country's GDP includes the value of that production?

A
The country where the factory’s owner is headquartered
B
The country where the factory is located
C
The country where the factory’s products are sold
D
The country where the factory’s workers were born

Choose one

1 point

A mill sells flour to a bakery, which uses it to make bread sold to a customer. Which treatment avoids double-counting this production in GDP?

A
Count both the flour and the bread because they are separate sales
B
Count the flour only because it was sold first
C
Count the bread's final sale, but not the flour separately
D
Count neither sale because the bakery used an intermediate input

Choose one

1 point

In the expenditure formula $GDP = C + I + G + (X - M)$ , why is $M$ , imports, subtracted?

A
To exclude goods and services produced abroad from domestic production
B
To remove exports that were made within the country
C
To prevent consumer spending from being included in GDP
D
To adjust domestic production for changes in the price level

True or false

1 point

The sale of a used car generally does not count as new production in GDP, although a newly provided service related to the sale may count.

A
True
B
False

Written response

1 point

Real GDP increases from $1{,}000$ billion to $1{,}020$ billion. What is the real GDP growth rate? Enter the numerical percentage, using 2 for 2%.

Written response

1 point

Some nonmarket services are included in GDP and are often valued by their production costs. What type of service is one example?

1 Measuring Economic Output Online Quiz Questions

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