GDP Calculation 5

Question 1

Which of the following best describes the output (production) approach to calculating GDP?

Accepted Answer

Summing the market value of all final goods and services produced in a period

Answer

The output approach sums the market value of every final good and service produced within a country's borders during the period.

Question 2

Real GDP per capita grew from $55,000 to $57,200. What was the approximate growth rate?

Accepted Answer

4%

Answer

Growth rate = ($57,200 - $55,000) / $55,000 × 100 = $2,200 / $55,000 × 100 = 4%.

Question 3

Which scenario involves 'double counting' that the value-added method avoids?

Accepted Answer

Adding flour sales and bread sales separately to GDP

Answer

Adding both flour and bread sales would count the flour's value twice; the value-added method avoids this by counting only each stage's added value.

Question 4

A country reports GDP of $2T in 2020 and $2.2T in 2021 (both in 2020 dollars). What does the $0.2T increase represent?

Accepted Answer

Real economic growth, since the values are already inflation-adjusted

Answer

Because both figures use 2020 dollars (real GDP), the $0.2T difference reflects actual growth in output, not just price changes.

Question 5

Which adjustment converts GDP to GNI (Gross National Income)?

Accepted Answer

GDP + Net factor income from abroad

Answer

GNI = GDP + Net factor income from abroad (income earned by residents abroad minus income paid to foreigners domestically).

GDP - Gross Domestic Product Practice Test