GDP Formula Quiz

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1. What portion of the GDP is accounted for by Consumer Spending?
A. 1/4
B. 1/3
C. 1/2
D. 2/3
2. What percent of the GDP is "lost" or subtracted from the total due to the trade deficit?
A. 1%
B. 2%
C. 3%
D. 4%
3. How does the money "lost" due to the trade deficit find its way back to the U.S.?
A. It doesn't. That is why trade imbalances are bad.
B. Consumers are forced to pay higher taxes.
C. The trade deficit is balanced by foreign investment back into the U.S.
D. Abroadians (foreigners) always purchase an equal value of U.S. exports to balance the trade.
4. How is "Investment" defined on the diagram?
A. The purchase of stocks or bonds.
B. Consumer Spending.
C. Identical to Income.
D. Money spent on long-term projects expected to increase future output and profits.

Created on ... March 26, 2006