Economics
GDP and Welfare
Practice questions
If the government increases unemployment benefits while total production remains unchanged, what is the direct effect on GDP?A broker earns a commission on the sale of a used car. Which statement is correct regarding GDP and welfare?If real GDP rises from two hundred billion to two hundred ten billion while population rises from one hundred million to one hundred ten million, what happens to real output per capita?Rapid extraction of a mineral resource raises current GDP. What is the main concern for long-term welfare?When both polluting production and spending on cleanup services rise, what problem arises in conventional GDP?If life expectancy and literacy rise while real GDP remains constant, what can be said?A country's nominal GDP rises by twenty-five percent while the price level also rises by twenty-five percent. What is the exact change in real GDP if both indices rise from the same base?Why may net domestic product sometimes be a better indicator of sustainable welfare than GDP?If output rises but most of the increase is in goods people consider harmful, what conclusion is appropriate?Under which circumstance may the welfare of poor groups fall even when real GDP per capita rises?How can excluding leisure distort comparisons between countries?If the government taxes polluting production and output falls slightly but air quality improves greatly what is a possible outcome?If volunteers provide free services to flood victims what is correct regarding conventional GDP and social welfare?Two countries have the same nominal GDP per capita but one has a lower price level. Which conclusion is more appropriate from a purchasing-power perspective?A country's real GDP rises while natural forest cover declines rapidly. What is the main limitation of the conventional measure?If real GDP grows at seven percent and population grows at two percent what is the approximate real per capita growth using the small-rate approximation?Using exact calculation if real GDP rises by eight percent and population by four percent what is the approximate real per capita growth?If income distribution becomes more equal and marginal utility declines with income why may total social utility rise at the same GDP?If firms adopt costly technology that reduces domestic pollution what short-run effect on GDP and welfare is possible?Average income rises with output growth but unemployment also rises. What is necessary in welfare analysis?