Calculation Methods 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 Methods flashcards as text
How does the Bureau of Economic Analysis (BEA) treat inventory accumulation in GDP calculations?
Answer: It is counted as part of gross private investment
Changes in business inventories are included in the investment (I) component of GDP because production occurred in the current period even if goods are not yet sold.
In GDP accounting, 'net exports' equal negative $200 billion. This means:
Answer: Imports exceeded exports by $200 billion
Net exports = Exports − Imports; a negative value indicates a trade deficit where imports exceed exports.
Which adjustment converts GDP to GNP (Gross National Product)?
Answer: Add income earned abroad by residents, subtract income earned domestically by foreigners
GNP = GDP + income received by U.S. residents from abroad − income paid to foreign residents in the U.S.
Consumption of fixed capital (depreciation) is subtracted from GDP to arrive at:
Answer: Net Domestic Product (NDP)
NDP = GDP − Consumption of Fixed Capital (depreciation), giving a measure of net economic output after accounting for capital wear.
In the production approach, an intermediate good is defined as:
Answer: A good used as an input in producing another good or service
Intermediate goods are inputs consumed in the production process and are excluded from GDP to avoid double-counting.
If nominal GDP grows 6% and the GDP deflator rises 4%, approximately what is real GDP growth?
Answer: 2%
Real GDP growth ≈ Nominal GDP growth − Inflation rate = 6% − 4% = 2%.
Which of the following is NOT included in the investment (I) component of U.S. GDP?
Answer: Purchase of corporate stocks and bonds
Financial investments like stock and bond purchases are not included in GDP's investment component because they are asset transfers, not production of new goods.