AP Macroeconomics : How to find GDP gross domestic product

Study concepts, example questions & explanations for AP Macroeconomics

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Example Questions

Example Question #1 : Tables

Each of the following is included in the gross domestic product EXCEPT _________.

Possible Answers:

Transfer payments

Net Exports

Consumption

Government Expenditures

Correct answer:

Transfer payments

Explanation:

To calculate the GDP, we add consumption, investment, government expenditures, and net exports. 

Transfer payments, such as social security, welfare, and unemployment checks, on the other hand, are not included in the calculation of the GDP.

Example Question #1 : Gross Domestic Product

Which of these methods is a correct model for GDP?

Possible Answers:

Correct answer:

Explanation:

The quantity of money times the velocity of money is equal to the real output times the price level. So, if the above equation is solved for Y, it gives us: 

Example Question #5 : Ap Macroeconomics

Which of the following is NOT a measure of income when using the income approach to calculate GDP?

Possible Answers:

Interest and investment income.

Profits from corporations.

Income from farmers.

Wages and salaries.

Governmental tax revenue.

Correct answer:

Governmental tax revenue.

Explanation:

The income approach to calculating GDP will arrive at the same number as other approaches, such as the production approach or expenditure approach. The five sources of income used to calculate Income GDP, or Gross Domestic Income, are wages and salaries; interest and investment income; corporate profits; farmers' income; and non-farm unincorporated business profits.

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