# Free Understanding GDP 03 Practice Test - 12th Grade - Commerce

Consumption of all goods and services in the economy during the period of an accounting year is known as :

A.

Aggregate demand

B.

Aggregate supply

C.

Aggregate consumption

D.

None of these

#### SOLUTION

Solution : C

Consumption of all goods and services in the economy during the period of an accounting year is called aggregate consumption.

Domestic product is equal to :

A.

National product + Net factor income from abroad

B.

National product - Net factor income from abroad

C.

National product ÷ Net factor income from abroad

D.

National product × Net factor income from abroad

#### SOLUTION

Solution : B

Domestic product is "National product - Net factor income from abroad".

Value-added method measures the contribution of which of the following within the domestic territory of a country?

A.

Household consumers

B.

The producing enterprises owned by residents of the country

C.

The producing enterprises owned by the non-residents of the country

D.

Both (b) and (c)

#### SOLUTION

Solution : D

The producing enterprises owned by the non-residents of the country and he producing enterprises owned by residents of the country are included in the value-added method.

Differences between closing stock and opening stock during an accounting year are known as:

A.

Increase in stock

B.

Change in stock

C.

Decrease in stock

D.

None of these

#### SOLUTION

Solution : B

Change in stock refers to the difference between opening and closing stock.

Which of the following is true about GDP?

A.

It is a stock variable

B.

It is a flow variable

C.

It is not a variable

D.

Its value is indeterminate

#### SOLUTION

Solution : A

GDP is a stock variable.

The summation of the total production of all firms and industries in the economy gives us the ____________ or value-added method.

A.

Investment

B.

Income

C.

Expenditure

D.

Production

#### SOLUTION

Solution : D

The value-added and the production methods are one and the same.

The opposite to a stock variable is called:

A.

Inventory variable

B.

Flow variable

C.

Spin variable

D.

Rolling variable

#### SOLUTION

Solution : B

The opposite to a stock variable is flow variable, which is dynamic is nature.

Wealth is an example of:

A.

Stock variable

B.

Flow variable

C.

Constant

D.

None of the above

#### SOLUTION

Solution : A

Wealth is a stock variable.

In the value added method, we subtract the intermediate consumption from total value to avoid the problem of:

A.

Including factor cost

B.

C.

Double counting

D.

Indirect tax miscalculation

#### SOLUTION

Solution : C

In order to avoid double counting, we subtract the intermediate consumption from total value.

Calculate the value added in the primary sector from the following data. Ignore units.

Value of output in primary sector800Value of output in secondary sector200Value of output in tertiary sector300Value of raw materials purchased by primary sector400Value of raw materials purchased by secondary sector100Value of raw materials purchased by tertiary sector50

A.

400

B.

800

C.

750

D.

1,300

#### SOLUTION

Solution : A

Value added = Value of output in primary sector - Value of raw materials purchased by primary sector
= 800 - 400
= 400