4.1.1 Measurement of Growth

• Economic growth is measured by the percentage change in GDP
• Why is Real GDP considered more accurate for measuring growth?

  It accounts for inflation
• GDP is the primary metric used to measure economic growth.
• What does Nominal GDP measure?

  Value at current prices
• What does economic growth refer to in economics?

  Increase in productive capacity
• Real GDP provides a more accurate measure of economic growth than Nominal GDP.

  True
• Match the GDP metric with its description:

  Nominal GDP ↔️ Value at current prices

  Real GDP ↔️ Adjusted for inflation
• Arrange the following steps in the process of calculating Real GDP using price indices:

  1️⃣ Identify the base year

  2️⃣ Calculate the price index

  3️⃣ Divide Nominal GDP by the price index
• Real GDP reflects the actual increase in production
• How is economic growth typically measured?

  Percentage change in GDP
• What does Nominal GDP measure?

  Value at current prices
• Nominal GDP measures the value of goods and services without adjusting for inflation
• Nominal GDP can increase due to higher prices
• The base year in calculating Real GDP is assigned a price index of 100.


  True
• Nominal GDP measures the value of goods and services at current prices
• How is economic growth typically measured?

  Percentage change in GDP
• Nominal GDP measures the value of goods and services at current prices.


  True
• Arrange the following in order of accuracy for measuring economic growth:

  1️⃣ Nominal GDP

  2️⃣ Real GDP
• Why is Real GDP a more accurate measure of economic growth than Nominal GDP?

  Accounts for inflation
• Nominal GDP can be misleading because it includes inflation.


  True
• Real GDP adjusts Nominal GDP for the effects of inflation
• Real GDP is more complex to calculate than Nominal GDP because it requires inflation adjustment.


  True
• Match the type of GDP with its calculation method:

  Nominal GDP ↔️ Quantity of Goods x Price of Goods

  Real GDP ↔️ Nominal GDP / Price Index
• Arrange the steps to calculate Real GDP using price indices:

  1️⃣ Choose a base year

  2️⃣ Calculate price indices

  3️⃣ Adjust Nominal GDP
• The base year in Real GDP calculation serves as a benchmark for comparing prices over time.


  True
• The economic growth rate is the percentage change in GDP
• What is one limitation of using economic growth rates to compare economies?

  Does not capture income inequality
• What should be considered when analyzing Real GDP growth trends over time?

  Consistency in measurement
• What is one factor to consider when evaluating the sustainability of economic growth?

  Environmental impact
• What aspect of a population does GDP fail to reflect?

  Income inequality
• GDP growth can come at the expense of environmental degradation
• What is the primary metric used to measure economic growth?

  GDP
• GDP reflects income inequality within a population.

  False
• Economic growth is typically measured by the percentage change in GDP
• Nominal GDP provides a more accurate measure of economic growth than Real GDP.

  False
• How is Nominal GDP calculated?

  At current prices
• Nominal GDP measures the total value of final goods and services at current prices
• The formula for calculating Real GDP is Nominal GDP divided by the price
• The economic growth rate is expressed as the percentage change in GDP from one period to the next.


  True
• How is the economic growth rate expressed in terms of GDP?

  Percentage change in GDP