Practice Questions
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What is the primary purpose of calculating Real GDP in an economy?
Real GDP shows how much a country produces, adjusted for inflation. Other options are incorrect because Some might think Real GDP helps us see how muc...
If a country's revenue increases but its national debt remains unchanged, what effect does this have on its budget deficit?
When a country earns more money, it can spend less than it makes. Other options are incorrect because Some might think that more revenue means more sp...
Which of the following scenarios best illustrates the impact of a budget deficit on fiscal policy and real GDP?
When a government borrows money to cover a budget deficit, it can invest in projects like roads and bridges. Other options are incorrect because Some ...
Which of the following scenarios would lead to an increase in real GDP, assuming no changes in prices or population?
When people feel confident about the economy, they spend more money. Other options are incorrect because Some might think cutting government spending ...
Which of the following scenarios would most likely lead to an increase in Real GDP, considering the expenditures and overall economic indicators?
When the government spends money on building roads or bridges, it creates jobs. Other options are incorrect because Some might think that less spendin...
What is the primary purpose of calculating Real GDP in an economy?
Real GDP shows how much a country produces, adjusted for price changes over time. Other options are incorrect because Some might think Real GDP helps ...
What is the primary difference between nominal GDP and real GDP?
Real GDP takes into account inflation. Other options are incorrect because This answer mixes up the terms; This answer suggests real GDP only counts p...
What is the purpose of the GDP deflator in calculating Real GDP?
The GDP deflator helps us adjust nominal GDP for inflation. Other options are incorrect because Some might think the deflator measures nominal GDP dir...
If the nominal GDP of a country is increasing while the GDP deflator is also rising, what can be inferred about the real GDP and the overall economic health?
When nominal GDP rises, it means the total money value of goods and services is increasing. Other options are incorrect because This option suggests t...
Nominal GDP : Real GDP :: Budget Surplus : ?
A budget surplus means you have extra money after spending. Other options are incorrect because Some might think economic growth is the opposite of a ...
A small country reports a nominal GDP of $200 billion and a GDP deflator of 125. Based on this information, what can be inferred about the real GDP and its implications for the country's economic health?
To find real GDP, we divide nominal GDP by the GDP deflator. Other options are incorrect because This answer suggests that real GDP is higher than nom...
To calculate Real GDP using the GDP deflator, you need to divide nominal GDP by the GDP deflator and multiply by 100. If nominal GDP is $1,000 billion and the GDP deflator is 125, Real GDP would be calculated as ______.
To find Real GDP, you divide $1,000 billion by 125, then multiply by 100. Other options are incorrect because This answer comes from thinking the GDP ...
A country has a nominal GDP of $1 trillion and a GDP deflator of 125. Based on this information, which of the following statements accurately classifies the economic situation regarding real GDP, budget deficits, and their implications for fiscal policy?
To find real GDP, we divide nominal GDP by the GDP deflator. Other options are incorrect because This answer assumes the economy is stable with no nee...
What is the correct order of steps to calculate real GDP from nominal GDP and the GDP deflator?
To find real GDP, you start with nominal GDP. Other options are incorrect because This option mixes up the order; This option suggests using real GDP ...
Which of the following statements accurately reflect the relationship between nominal GDP, real GDP, and the GDP deflator? Select all that apply.
Other options are incorrect because This statement confuses the GDP deflator with real GDP; This option mixes up how to calculate real GDP....
If nominal GDP increases while the GDP deflator remains the same, what happens to real GDP?
When nominal GDP goes up and the GDP deflator stays the same, real GDP also increases. Other options are incorrect because Some might think that if pr...
If a country's nominal GDP increases but its real GDP remains unchanged, what is the likely cause of this situation?
When prices rise, nominal GDP can go up. Other options are incorrect because Some might think that cutting government spending would boost GDP; People...
Master Calculating Real GDP and Deficits
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