Part I

Multiple choice questions

1. What does GDP stand for?

a. Gross Domestic Price
b. General Domestic Product
c. Gross Domestic Profit
d. Gross Domestic Product
2. Nominal GDP is calculated using:
a. Current market prices
b. Constant base-year prices
c. Real wages
d. Inflation rates
3. Which of the following is included in the calculation of GDP?
a. Transfer payments
b. Private savings
c. Government debt
d. Consumer spending on goods and services
4. If nominal GDP is $500 billion and the GDP deflator is 120, what is the real GDP?
a. $416.67 billion
b. $416.67 million
c. $416.67 trillion
d. $416.67 thousand
5. What is the primary limitation of using nominal GDP to compare economic output
across different years?
a. It does not account for inflation.
b. It does not include government spending.
c. It is influenced by exchange rates.
d. It does not consider population growth.
6. Which component of GDP includes the value of all goods and services produced by
a country's residents, regardless of their location?

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 a. Personal consumption expenditures
b. Net exports
c. Gross private domestic investment
d. Gross national product (GNP)
7. If the GDP deflator is 110 and nominal GDP is $550 billion, what is the real GDP?
a. $500 billion
b. $500 million
c. $550 billion
d. $500.5 billion
8. Which of the following is an example of an investment component in GDP?
a. Purchases of stocks and bonds
b. Consumer spending on durable goods
c. Government expenditure on public services
d. Business spending on new machinery
9. In the expenditure approach to calculating GDP, what is the largest component?
a. Consumption
b. Investment
c. Government spending
d. Net exports

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 Part II
1. In a country, the components of GDP are: Consumption = $500 billion, Investment = $200
billion, Government Spending = $150billion, and Net Exports = -$50 billion. Calculate the GDP
using the expenditure approach.
2. The income components in a country are: Compensation of employees = $300 billion, Gross
profits = $100 billion, Taxes less any subsidies = $50billion, and Depreciation = $20 billion.
Calculate the GDP using the income approach.
3. If the nominal GDP is $800 billion and the real GDP is $700 billion, calculate the GDP deflator.
4. If the Consumer Price Index (CPI) in Year 1 is 150 and in Year 2 is 160, calculate the inflation
rate.
5. If the nominal GDP is $900 billion and the GDP deflator is 120, calculate the real GDP.
6. If a country has a GDP of $1.2 trillion and a population of 300 million, calculate the per capita
GDP.