Question 1

Which of the following transactions would be included in the calculation of U.S. GDP for the current year?

Accepted Answer

A new Tesla automobile assembled in California

Question 2

GDP is best defined as:

Accepted Answer

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

Question 3

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

A used macroeconomics textbook

Question 4

Why are intermediate goods excluded from GDP calculations?

Accepted Answer

Their value is already included in the value of final goods

Question 5

Which equation correctly represents the expenditure approach to calculating GDP?

Accepted Answer

$$Y = C + I + G + NX$$

Question 6

A U.S. company produces computers in Mexico and sells them in the U.S. How is this reflected in GDP?

Accepted Answer

Included in Mexico's GDP

Question 7

Which of the following best describes a trade deficit?

Accepted Answer

Imports exceed exports, $$NX \u003c 0$$

Question 8

Which of the following is an example of a government transfer payment, and why is it excluded from GDP?

Accepted Answer

Social Security benefits; no goods or services are received in return

Question 9

If a car is produced in December 2023 but sold to a consumer in January 2024, how is it counted in GDP?

Accepted Answer

It is included in 2023 GDP as part of inventory investment

Question 10

Which of the following is a limitation of GDP as a measure of economic well-being?

Accepted Answer

All of the above

Question 11

Suppose the U.S. runs a trade surplus. Which of the following must be true?

Accepted Answer

$$X \u003e M$$ and $$NX \u003e 0$$

Question 12

Which of the following would increase GDP in the current year?

Accepted Answer

A family purchases a newly built house

Question 13

Why are financial assets such as stocks and bonds excluded from GDP calculations?

Accepted Answer

They are not produced goods or services

Question 14

Which of the following is an example of a nondurable good?

Accepted Answer

A loaf of bread

Question 15

If the Bureau of Economic Analysis revises GDP upward due to a downward revision to imports, what is the likely effect on net exports?

Accepted Answer

Net exports increase, raising GDP

Question 16

Which of the following best explains why GDP does not measure the quality of goods?

Accepted Answer

GDP only measures market value, not improvements in quality

Question 17

A farmer purchases a new tractor for use on his farm. How is this transaction classified in the expenditure approach to GDP?

Accepted Answer

Gross private investment

Question 18

Which of the following is an example of a service included in GDP?

Accepted Answer

A concert ticket purchased by a consumer

Question 19

If a U.S. company produces goods in the U.S. and sells them abroad, how is this reflected in the GDP equation?

Accepted Answer

It increases net exports, $$NX$$

Question 20

Which of the following is NOT a component of GDP in the expenditure approach?

Accepted Answer

Transfer payments

Gross Domestic Product (GDP): Concepts, Calculation, and Limitations

Study Guide - Practice Questions