Q: Given the following data for a country: Nominal GDP = $$500$$ billion, Real GDP = $$400$$ billion. What is the GDP deflator?

$$\frac{500}{400} \times 100 = 125$$

Question 1

Which of the following best describes Gross Domestic Product (GDP)?

Accepted Answer

The market value of all final goods and services produced within a country in a given time period.

Question 2

Which equation correctly represents the expenditure approach to measuring GDP?

Accepted Answer

$$Y = C + I + G + (X-M)$$

Question 3

If Slovakia’s government increases its spending on infrastructure without changing taxes, which component of aggregate demand is directly affected?

Accepted Answer

Government expenditure (G)

Question 4

Which of the following is NOT included in the calculation of GDP using the expenditure approach?

Accepted Answer

Unemployment benefits paid by the government

Question 5

What is the main difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP is measured at current market prices, while real GDP is measured at base year prices.

Question 6

Given the following data for a country: Nominal GDP = $$500$$ billion, Real GDP = $$400$$ billion. What is the GDP deflator?

Accepted Answer

$$\frac{500}{400} 	imes 100 = 125$$

Question 7

Which of the following is a limitation of using real GDP to compare living standards across countries?

Accepted Answer

Goods and services in different countries may not be valued at the same prices.

Question 8

Which of the following is an example of an alternative measure of economic activity that considers well-being and environmental impact?

Accepted Answer

Net Economic Welfare (NEW)

Question 9

What happens to the aggregate demand curve if the government increases taxes?

Accepted Answer

It shifts to the left.

Question 10

Which of the following factors would cause a movement along the aggregate demand curve, rather than a shift of the curve?

Accepted Answer

A change in the price level

Question 11

If the price level rises but the money wage rate and other resource prices remain constant, what is the effect on the short-run aggregate supply curve?

Accepted Answer

There is a movement along the curve.

Question 12

Which of the following would increase potential GDP?

Accepted Answer

An increase in the quantity of capital

Question 13

In the short-run macroeconomic equilibrium, what is assumed about the money wage rate?

Accepted Answer

It is fixed.

Question 14

Which school of thought argues that the economy is self-regulating and always at full employment?

Accepted Answer

Classical

Question 15

According to Keynesian economics, what is the most significant influence on aggregate demand?

Accepted Answer

Expectations about the future

Question 16

Suppose the central bank decreases the growth rate of the money supply. According to Monetarist theory, what is the likely outcome?

Accepted Answer

The economy will go into recession.

Question 17

Which of the following is NOT a reason why real GDP may not fully reflect the standard of living?

Accepted Answer

It includes environmental quality.

Question 18

If the short-run aggregate supply decreases due to higher energy costs, what is the likely macroeconomic outcome?

Accepted Answer

Stagflation

Question 19

Which of the following best explains the wealth effect as it relates to the aggregate demand curve?

Accepted Answer

As the price level falls, the real value of wealth increases, leading to more consumption.

Measuring Macroeconomic Performance and the AD/AS Model

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