Multiple Choice Questions: Limitations and Economic Growth

Nominal GDP differs from Real GDP because:

• Nominal GDP is adjusted for inflation.

• Real GDP uses current prices.

• Nominal GDP is affected by price changes.

• Real GDP excludes services.

Real GDP per capita gives a clearer measure of:

• Distribution of wealth

• Average income per person

• Household non-market activities

• Environmental sustainability

Which of the following is a limitation of Real GDP as a measure of well-being?

• It includes household production.

• It reflects happiness and leisure.

• It ignores environmental costs.

• It captures income distribution.

If a parent takes care of their child at home, why is this not counted in GDP?

•  Because it is unpaid, non-market activity

• Because it is included under leisure

• Because it improves quality of life

• Because it reduces work-life balance

Which of the following is not a component of HDI?

• Life expectancy

• Education (years of schooling)

• GNI per capita (PPP adjusted)

• Inflation rate

Why might two countries with similar GDP per capita have very different HDI rankings?

• GDP accounts for health differences.

• HDI also considers health and education.

• GDP includes environmental costs.

• HDI only measures economic output.

If a country has a GDP per capita of $10,000 but most wealth is concentrated in 10% of the population, which limitation applies?

• Excludes non-market activities

• Ignores income distribution

• Neglects environmental costs

• Does not reflect quality improvements

A country’s Real GDP in Year 1 was 550 billion, and in Year 2 it increased to $550 billion. What is the economic growth rate?

• 5%

• 10%

• 15%

• 20%

A country’s Real GDP is $900 billion, and its population is 300 million. What is Real GDP per capita?

• $2,000

• $3,000

• $5,000

• $9,000

• Country A has higher GDP per capita.

• Country B has higher GDP per capita.

• Both have the same GDP per capita.

• GDP per capita cannot be calculated from the information given.