Concept and Indicators 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 Concept and Indicators flashcards as text
Which of the following is NOT counted in U.S. GDP?
Answer: A U.S. company's factory output in Mexico
GDP measures output produced within a country's borders, so a U.S. company's output in Mexico is excluded.
The GDP deflator is best described as:
Answer: The ratio of nominal GDP to real GDP multiplied by 100
The GDP deflator equals (Nominal GDP / Real GDP) × 100, capturing the overall price level of all goods in the economy.
In the expenditure approach to GDP, net exports equal:
Answer: Exports minus imports
Net exports (NX) = Exports − Imports; a trade deficit means NX is negative, reducing GDP.
Which scenario would INCREASE measured GDP?
Answer: A restaurant hires a new chef and increases sales
Market transactions for final goods and services are counted; unreported cash transactions and household production are not.
Potential GDP refers to:
Answer: The level of output when all resources are fully and efficiently employed
Potential GDP is the economy's maximum sustainable output when labor and capital are fully utilized without generating excess inflation.
Which indicator is used to compare living standards across countries with different population sizes?
Answer: GDP per capita
GDP per capita divides total GDP by population, allowing meaningful comparisons of average output and living standards.
The 'output gap' is defined as:
Answer: The difference between actual GDP and potential GDP
A positive output gap means the economy is overheating; a negative gap indicates underutilized resources and slack.