GDP - Gross Domestic Product GDP and Economic Growth Questions and Answers

Question 1

If a country's real GDP per capita is growing at a constant rate of 2.5% per year, approximately how many years will it take for its real GDP per capita to double?

Accepted Answer

28 years

Answer

18 years

Answer

40 years

Answer

70 years

Question 2

A domestic manufacturer produces $1 million worth of goods in a year. They sell $800,000 worth to domestic consumers and add the remaining $200,000 worth to their warehouse. How is this accounted for in GDP using the expenditure approach (Y = C + I + G + NX)?

Accepted Answer

$800,000 is added to Consumption (C), and $200,000 is added to Investment (I).

Answer

$800,000 is added to Consumption (C), and the remaining $200,000 is not counted until it is sold.

Answer

$1 million is added to Consumption (C).

Answer

$1 million is added to Investment (I).

Question 3

Which of the following is considered the most critical driver of sustained, long-run increases in a country's standard of living?

Accepted Answer

Technological progress.

Answer

A steady increase in the population size.

Answer

Accumulation of physical capital.

Answer

Government spending on infrastructure.

Question 4

An economy is operating where its actual real GDP is significantly lower than its potential GDP. This situation is best described as a(n):

Accepted Answer

Recessionary gap

Answer

Inflationary gap

Answer

Long-run equilibrium

Answer

Supply-side shock

Question 5

Which of the following institutional factors is most fundamental for encouraging the private investment and innovation necessary for long-term economic growth?

Accepted Answer

Well-defined and legally enforced property rights.

Answer

High tariffs to protect domestic firms.

Answer

Frequent government intervention in key industries.

Answer

A large public sector to direct investment.

Question 6

In Year 1, a country has a real GDP of $500 billion and a population of 50 million. In Year 2, real GDP grows to $525 billion and the population grows to 51 million. What is the approximate growth rate of real GDP per capita?

Accepted Answer

3.0%

Answer

5.0%

Answer

7.0%

Answer

2.0%