GDP Study Guide 2026
Everything you need to pass the GDP exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 GDP Exam Format at a Glance
📚 GDP Topics to Study (21)
✍️ Sample GDP Questions & Answers
1. Which of the following is a primary component of the income approach to calculating GDP?
The income approach to GDP measures the total income generated by production. A major component of this approach is the compensation of employees, which includes wages, salaries, and other benefits paid to workers. The other options are components of the expenditure approach.
2. An economist is calculating a country's Gross Domestic Product (GDP) using the expenditure approach. Which of the following transactions would be included in the calculation?
The expenditure approach to GDP is calculated as C + I + G + (X-M). The purchase of a newly built house is considered part of Investment (I) and is therefore included in the GDP calculation. The purchase of tires by a car manufacturer is an intermediate good, social security is a transfer payment, and buying stocks is a financial transaction; none of these are included in GDP.
3. According to PPP theory, in the long run, exchange rates should adjust so that:
PPP theory holds that arbitrage will drive prices toward equality, so identical goods should cost the same across countries once expressed in a common currency.
4. Which of the following would cause GDP per capita to rise even if total GDP stays constant?
If total GDP stays the same but the population shrinks, the same output is divided among fewer people, raising per capita GDP.
5. Which of the following correctly describes the impact of a foreign direct investment (FDI) inflow into the U.S. on GDP?
Foreign direct investment increases the capital stock in the U.S., which shows up as higher investment (I) in the GDP expenditure formula.
6. Which of the following transactions would be included in the calculation of a country's Gross Domestic Product (GDP)?
GDP measures the market value of all final goods and services produced within a country in a specific period. The purchase of a new lawnmower represents the purchase of a final, newly produced good and is therefore included in the consumption component of GDP. Financial transactions like buying stock, government transfer payments, and the sale of used or antique goods do not reflect current production and are excluded.