14 Questions
What does Gross Domestic Product (GDP) measure?
The monetary value of all final goods and services produced within the country
Which of the following is included in the calculation of Gross Domestic Product (GDP)?
The value of all consumer spending
What does the Gross Domestic Product (GDP) reflect?
The total value of consumer and government spending, investments, and exports minus imports
How is Gross Domestic Product (GDP) defined?
The total monetary value of all final goods and services produced within a country within a specific time period
What is NOT subtracted from the calculation of Gross Domestic Product (GDP)?
Value of all exports
Which of the following is NOT a component of Gross Domestic Product (GDP)?
Value of all imports
What does Nominal GDP reflect?
The total value of goods and services produced at current year prices
What does Real GDP track?
The total value of goods and services produced at constant prices
Why is Real GDP considered a more accurate indicator of economic performance?
Because it adjusts for changes in the price level, providing a measure of the economy's output in constant or inflation-adjusted terms
In periods of positive inflation, what is the relationship between Real GDP and Nominal GDP?
Real GDP will always be less than Nominal GDP
What is the Currency Deposit Ratio (CDR)?
The ratio of money held by the public in a currency to that they hold in bank deposits
How does CDR affect inflation?
It increases inflation as people convert deposits to cash balances
What does Reserve Deposit Ratio (RDR) represent?
The proportion of the total deposits that banks keep as reserves
What is Reserve money composed of?
Vault cash in banks and deposits of commercial banks with RBI
Check your answers for Vajiram & Ravi Institute's Prelims GS Test 03 Economics with this answer key. Detailed explanations are provided to help you understand the solutions.
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