AP Macroeconomics : Gross Domestic Product
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Example Questions
Example Question #1 : Other Gdp Gross Domestic Product
Each of the following is included in the gross domestic product EXCEPT _________.
Consumption
Net Exports
Government Expenditures
Transfer payments
Transfer payments
To calculate the GDP, we add consumption, investment, government expenditures, and net exports.
Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.
Example Question #1 : Gross Domestic Product
Which of these methods is a correct model for GDP?
The quantity of money times the velocity of money is equal to the real output times the price level. So, if the above equation is solved for Y, it gives us:
Example Question #1 : Gross Domestic Product
Which of the following is NOT a measure of income when using the income approach to calculate GDP?
Profits from corporations.
Interest and investment income.
Governmental tax revenue.
Wages and salaries.
Income from farmers.
Governmental tax revenue.
The income approach to calculating GDP will arrive at the same number as other approaches, such as the production approach or expenditure approach. The five sources of income used to calculate Income GDP, or Gross Domestic Income, are wages and salaries; interest and investment income; corporate profits; farmers' income; and non-farm unincorporated business profits.
Example Question #1 : Gross Domestic Product
In a certain year, nominal gross domestic product grew by 8 percent. The inflation rate was 4 percent. Real gross domestic product for this year was _______.
grew by 4 percent
grew by 8 percent
grew by 12 percent
remained constant
grew by 4 percent
Nominal GDP growth refers to the rate at which real GDP increases. To find real GDP growth (i.e. GDP growth that accounts for inflation), subtract the inflation rate from the nominal GDP growth rate.
In this case, the nominal GDP growth rate is 8 percent, and the inflation rate is 4 percent. Thus, the real GDP growth rate is 4%.
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