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Economics and Finance

GDP and GNP Practice Questions

19 free GDP and GNP practice questions for the Static GK. Tap an option to answer — you get instant feedback, the correct answer, and a detailed explanation for every question.

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Question 1 of 19 Medium

What does GNP stand for?

  1. A Gross National Product
  2. B Global National Production
  3. C General Net Product
  4. D Gross Net Production

Correct answer: Gross National Product

GNP stands for Gross National Product. It includes GDP plus net income earned from abroad.

Question 2 of 19 Medium

Which measure includes income earned by residents abroad?

  1. A GDP
  2. B NDP
  3. C NNP
  4. D GNP

Correct answer: GNP

GNP includes income earned by a country's residents from abroad. It adds net foreign income to GDP.

Question 3 of 19 Medium

GDP measures the value of goods and services produced within:

  1. A A continent
  2. B The world
  3. C A company
  4. D A country

Correct answer: A country

GDP measures production within a country's borders. It does not consider the nationality of producers.

Question 4 of 19 Medium

Which of the following is added to GDP to calculate GNP?

  1. A Depreciation of fixed capital assets
  2. B Net exports of goods and services
  3. C Net factor income from abroad
  4. D Net indirect taxes

Correct answer: Net factor income from abroad

GNP is calculated by adding net factor income from abroad to GDP. This includes income earned by residents overseas minus income paid to foreigners.

Question 5 of 19 Medium

Which of the following is excluded from GDP?

  1. A Government spending
  2. B Exports
  3. C Intermediate goods
  4. D Investment

Correct answer: Intermediate goods

Intermediate goods are excluded to avoid double counting. Only final goods and services are included in GDP.

Question 6 of 19 Medium

What is nominal GDP?

  1. A GDP adjusted for inflation
  2. B GDP at constant base-year prices
  3. C GDP at current market prices
  4. D GDP excluding taxes

Correct answer: GDP at current market prices

Nominal GDP is measured using current market prices. It does not account for inflation.

Question 7 of 19 Medium

What is real GDP?

  1. A GDP including taxes
  2. B GDP measured at current prices
  3. C GDP excluding exports
  4. D GDP adjusted for inflation

Correct answer: GDP adjusted for inflation

Real GDP values all goods and services produced in a year at the prices of a fixed base year, so the effect of price changes is stripped out. Nominal GDP is measured at current prices instead, and can rise purely because of inflation even when output is flat. Comparing real GDP across years therefore shows the true change in production.

Question 8 of 19 Medium

Which approach calculates GDP by summing incomes?

  1. A Expenditure approach
  2. B Output approach
  3. C Value-added approach
  4. D Income approach

Correct answer: Income approach

The income approach sums all incomes earned in production. This includes wages, rent, interest, and profits.

Question 9 of 19 Medium

Which approach calculates GDP by summing spending?

  1. A Income approach
  2. B Production approach
  3. C Expenditure approach
  4. D Aggregate demand approach

Correct answer: Expenditure approach

The expenditure approach adds consumption, investment, government spending, and net exports. It reflects total spending in the economy.

Question 10 of 19 Medium

Which component is part of GDP calculation?

  1. A Consumption
  2. B Savings
  3. C Loans
  4. D Imports only

Correct answer: Consumption

Consumption is a major component of GDP. It includes household spending on goods and services.

Question 11 of 19 Medium

Which of the following reduces GDP when calculated using the expenditure method?

  1. A Exports
  2. B Consumption
  3. C Imports
  4. D Investment

Correct answer: Imports

Imports are subtracted in GDP calculation because they are produced outside the country. They are included in consumption but not domestic output.

Question 12 of 19 Medium

What does a rise in GDP generally indicate?

  1. A Economic growth
  2. B Economic decline
  3. C Inflation only
  4. D Population decrease

Correct answer: Economic growth

A rise in GDP indicates economic growth. It means more goods and services are being produced.

Question 13 of 19 Medium

Which measure subtracts depreciation from GDP?

  1. A NDP
  2. B GNP
  3. C NNP
  4. D NI

Correct answer: NDP

Net Domestic Product (NDP) is GDP minus depreciation. It reflects the net output after accounting for wear and tear.

Question 14 of 19 Medium

Which of the following best describes GDP per capita?

  1. A GDP divided by population
  2. B Total GDP of a country
  3. C GDP minus taxes
  4. D GDP including exports only

Correct answer: GDP divided by population

GDP per capita is calculated by dividing GDP by the population. It indicates average economic output per person.

Question 15 of 19 Medium

Which term refers to the market value of all final goods and services produced within a country's borders in a year?

  1. A GDP
  2. B GNP
  3. C NDP
  4. D NNP

Correct answer: GDP

GDP counts output produced inside the country's geographical borders, whoever owns the factors of production, and counts only final goods so that intermediate goods are not double counted. GNP instead counts output produced by a country's nationals wherever in the world they are, while NDP and NNP are the corresponding figures after depreciation has been subtracted.

Question 16 of 19 Medium

Which of the following is NOT included in GDP?

  1. A Illegal activities
  2. B Government expenditure
  3. C Investment
  4. D Exports

Correct answer: Illegal activities

Illegal activities are generally not included in official GDP calculations. GDP focuses on recorded economic activity.

Question 17 of 19 Medium

Which factor distinguishes GDP from GNP?

  1. A National vs international trade balance
  2. B Geographical boundaries vs nationality
  3. C Prevailing inflation rate
  4. D Rate of domestic taxation

Correct answer: Geographical boundaries vs nationality

GDP is based on geographical boundaries, while GNP is based on nationality. GNP includes income earned abroad by residents.

Question 18 of 19 Medium

Which measure includes net income from abroad and subtracts depreciation?

  1. A GDP
  2. B GNP
  3. C NNP
  4. D NDP

Correct answer: NNP

Net National Product (NNP) equals GNP minus depreciation. Since GNP already includes net income earned abroad by residents, NNP is the measure that accounts for both international income and the subtraction of depreciation.

Question 19 of 19 Medium

Why is GDP not a perfect measure of welfare?

  1. A It accounts for all income earned in the economy
  2. B It ignores income inequality and unpaid work
  3. C It measures inflation across the economy
  4. D It includes exports in its calculation

Correct answer: It ignores income inequality and unpaid work

GDP does not account for income inequality or unpaid work such as household labor. Therefore, it does not fully reflect welfare.

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