Lesson 51: Measuring GDP: The GDP Equation

Suppose a country with a GDP of $2 million has a GDP per capita of $50. What is the population of this country?

40,000

________ represents the largest component of GDP in the United States.

Consumption

An increase in real GDP may be caused by an increase in prices or an increase in the production of goods and services.

False

Countries with the highest GDPs always have the highest standards of living.

False

When real GDP decreases, employment typically increases.

False

______________ goods are purchased for resale or to be used to produce other goods. They are not included in GDP.

Intermediate

A higher GDP per capita generally is associated with a higher standard of living.

True

According to the GDP equation, GDP = Consumption + Investment + Government Spending + Net Exports.

True

An increase in nominal GDP may be caused by an increase in prices or an increase in the production of goods and services.

True

In 2010, the United States had the highest GDP in the world.

True

The purchase of $1,000 worth of stocks is not included in GDP.

True

If a Virginia college student purchased a new textbook that had been published in the United States, this would fall under the ________ component of GDP.

consumption

If your local school purchased 1,000 new textbooks that had been published in the United States, this would fall under the ________ component of GDP.

government spending

Overall, between 1970 and 2010, real GDP in the United States

increased.

If a college student in Paris purchased a new textbook that had been published in the United States, this would fall under the ________ component of GDP.

net exports