Practice Test GeeksGDP - Gross Domestic Product Practice Test
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Calculation Flashcards

7 cards from real GDP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Calculation flashcards as text

  1. Using the expenditure approach, which formula correctly represents GDP?

    Answer: GDP = C + I + G + (X - M)

    GDP equals Consumption plus Investment plus Government spending plus Net Exports (Exports minus Imports).

  2. A country has consumption of $800B, investment of $200B, government spending of $300B, exports of $150B, and imports of $180B. What is GDP?

    Answer: $1,470B

    $800B + $200B + $300B + ($150B - $180B) = $1,470B.

  3. In the income approach, which of the following is NOT typically included in GDP calculation?

    Answer: Transfer payments

    Transfer payments like Social Security are not included because they do not represent production of goods or services.

  4. The value-added method calculates GDP by summing:

    Answer: The value added at each stage of production

    To avoid double-counting, GDP sums only the value added at each production stage, not total sales.

  5. If a baker buys $2 of flour and sells $5 of bread, what is the value added by the baker?

    Answer: $3

    Value added equals the selling price minus the cost of intermediate goods: $5 - $2 = $3.

  6. Which component of GDP includes business spending on new machinery and residential construction?

    Answer: Gross Private Domestic Investment

    Gross Private Domestic Investment covers business equipment, structures, and residential construction.

  7. When calculating GDP using the expenditure approach, which transaction is included?

    Answer: A household buys a newly built home

    New residential construction counts as gross investment in GDP; resales of existing assets and transfer payments do not.