Multiple Choice
Suppose a person deposits \$1,000 in cash into a checking account at a commercial bank. If the required reserve ratio is 10%, what is the maximum possible increase in the M1 money supply resulting from this deposit?
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11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)
Calculating GDP
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Refer to the data dashboard shown. Which indicator is commonly used as a cross-check on GDP in national accounts?
A
Gross National Income (GNI)
B
Unemployment Rate
C
Producer Price Index (PPI)
D
Consumer Price Index (CPI)
Verified step by step guidance1
Understand that Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders during a specific period.
Recognize that Gross National Income (GNI) adjusts GDP by adding income earned by residents from abroad and subtracting income earned by foreigners domestically, providing a broader measure of national income.
Identify that GNI is commonly used as a cross-check on GDP because it accounts for income flows across borders, helping to verify the accuracy of GDP figures in national accounts.
Note that other indicators like the Unemployment Rate, Producer Price Index (PPI), and Consumer Price Index (CPI) measure different economic aspects and are not used as cross-checks on GDP.
Conclude that among the given options, Gross National Income (GNI) is the appropriate indicator used to cross-check GDP in national accounts.
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