01
Choose one
1 point
Which activity best describes the role of households in the circular flow of a national economy?
Free Practice Quiz Question List
Measuring Economic Performance Online Quiz Questions
Use this free practice quiz with 20 questions to review Measuring Economic Performance, test your knowledge, and prepare for your next test or exam.
20 questions
02
Choose one
1 point
A farmer sells wheat to a mill, the mill sells flour to a bakery, and the bakery sells bread to a household. Which transaction should be counted as the final-goods measure of this production for GDP?
- A
The farmer's wheat is counted in addition to the bread.
- B
The mill's flour is counted in addition to the bread.
- C
The household's purchase of bread is counted as final output.
- D
The bakery's purchase of flour is counted as government spending.
03
Choose one
1 point
An economy has nominal GDP of $300 billion and real GDP of $200 billion. What is its GDP deflator?
- A
50
- B
100
- C
150
- D
200
04
Choose all
1 point
Which two transactions are included in gross private domestic investment for the expenditure approach? Select all correct choices.
- A
A firm buys newly produced machinery.
- B
A household buys shares of an existing corporation.
- C
A business accumulates newly produced unsold inventory.
- D
The government makes unemployment benefit payments.
05
Choose all
1 point
Which three kinds of information would complement GDP when evaluating whether economic performance has improved people's well-being? Select all correct choices.
- A
Poverty rates and income shares
- B
The number of stock-market trades alone
- C
Environmental quality and resource use
- D
Health and educational outcomes
06
True or false
1 point
True or false: Imports are subtracted in the expenditure approach because domestic spending totals may include goods and services produced abroad.
- A
True
- B
False
07
True or false
1 point
True or false: GDP and gross domestic income can differ in practice even though they measure the same overall economic activity from different perspectives.
- A
True
- B
False
08
Written response
1 point
An economy has consumption of 700 billion dollars, investment of 180 billion dollars, government purchases of 250 billion dollars, exports of 90 billion dollars, and imports of 120 billion dollars. Enter GDP in billion dollars as a whole number.
09
Written response
1 point
What is the standard name for the measure of production that uses constant or chained prices to remove the effect of price changes?
10
Fill in the blank
1 point
GDP should count the bread purchased by the household as a , rather than also counting the wheat and flour separately. Counting both inputs and the bread would create .
11
Fill in the blank
1 point
Investment that includes spending to replace worn-out capital is called . GDP minus depreciation, also called consumption of fixed capital, equals .
12
Open ended
1 point
A family previously cared for its children at home without pay. It now pays a childcare center to provide essentially the same care. Explain how this change could affect measured GDP and why the change in GDP should not automatically be interpreted as an equal improvement in economic well-being.
13
Choose one
1 point
An economy produces the same quantity of apples in two years, but the price of apples increases. What will happen, assuming apples are the only output?
- A
Nominal GDP falls while real GDP rises.
- B
Nominal GDP rises while real GDP stays unchanged.
- C
Both nominal and real GDP must rise by the same percentage.
- D
Real GDP rises while nominal GDP stays unchanged.
14
True or false
1 point
True or false: If pollution cleanup spending increases GDP, GDP has necessarily increased by an amount that accurately represents an improvement in overall economic well-being.
- A
True
- B
False
15
Choose one
1 point
A farmer sells wheat to a mill, the mill sells flour to a bakery, and the bakery sells bread to a household. Which transaction should be counted as the final-goods value in GDP for this chain of production?
- A
The flour sold by the mill to the bakery
- B
The bread sold by the bakery to the household
- C
The wheat sold by the farmer to the mill
- D
The resale of a used bread oven
16
Choose one
1 point
Which government transaction is excluded from government purchases in the expenditure approach to GDP?
- A
The government buys a new fire truck
- B
The government pays a public-school teacher's salary
- C
The government constructs a public highway
- D
The government pays unemployment benefits
17
Choose one
1 point
An economy produces 100 apples in both Year 1 and Year 2. The price rises from $2 per apple in Year 1 to $3 per apple in Year 2. Using Year 1 prices to calculate Year 2 real GDP, what happens from Year 1 to Year 2?
- A
Nominal GDP rises while real GDP is unchanged
- B
Both nominal GDP and real GDP must rise by 50 percent
- C
Nominal GDP is unchanged while real GDP rises
- D
Real GDP rises while nominal GDP is unchanged
18
Choose one
1 point
Which statement best explains why an increase in GDP does not necessarily mean that environmental well-being has improved?
- A
GDP automatically falls whenever pollution increases
- B
GDP fully subtracts the depletion of natural resources
- C
GDP measures environmental quality better than market output
- D
GDP can rise even when production creates pollution or resource depletion
19
Written response
1 point
What is the income-side measure of domestic production called? Enter the full name or its standard abbreviation.
20
Written response
1 point
An economy has consumption of 700 billion dollars, investment of 180 billion dollars, government purchases of 250 billion dollars, exports of 90 billion dollars, and imports of 120 billion dollars. What is GDP? Enter the value in billions of dollars as a whole number.