Which list gives the four categories in GDP's spending approach?

• Consumption, investment, government purchases, net exports
• Consumption, financial asset trades, cash transfers, gross exports
• Consumption, investment, government transfers, total imports

In a domestic production chain, a baker buys flour for 1 coin, uses it to make bread, and sells that bread to a household for 3 coins in the same year. What is this chain's contribution to GDP?

• 4 coins, adding the flour sale to the final bread sale.
• 3 coins, counting the final bread's value once.
• 1 coin, counting the flour but excluding the bread sale.

Real GDP adjusts for price changes so changes in output can be compared across years.

A town buys 100 coins of newly produced domestic oil-spill cleanup services this year. All other domestic output is unchanged. Compared with the same economy without those services, what is the effect on GDP?

• GDP is 100 coins lower because the cleanup repairs environmental harm.
• GDP is unchanged because restoring damage never counts as output.
• GDP is 100 coins higher than it would be without the cleanup.

For the same year, A has GDP of 180 coins and 30 people; B has GDP of 120 coins and 15 people. Units and price levels are comparable. Which comparison of GDP per head is valid?

• A: 6; B: 8. Every person receives their country's average.
• A: 6; B: 8. The averages do not show income inequality.
• A: 30; B: 15. The populations show output per person.

A government is choosing a school policy. Which use of GDP recognizes its limits?

• Choosing school policy using GDP and learning outcomes.
• Treating GDP growth alone as proof every pupil learned more.
• Treating school spending alone as proof every pupil can read.

GDP per head rises during a boom. Top earners' incomes double, while most workers' wages stay unchanged. Why does the GDP-per-head increase not prove that most workers gained?

• The average can rise while most wages stay unchanged.
• The average rising means each person's wage rose equally.
• The average rising means no income inequality remains.

A country's real GDP grows 4 percent. During the same year, river pollution worsens and people have less free time. Which conclusion is supported?

• Everyone's wellbeing improved because real GDP rose that year.
• Output increased, but wellbeing may have worsened.
• Output must have fallen because river pollution became worse.