Lesson 4.2.1.4

4.2.1.4 Uses of national income data Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.1.4, Uses of national income data: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. What type of economic activity is omitted from GDP, understating national living standards?

    • Capital investment
    • Unpaid home work
    • Government spending
    • Export sales

  2. What does a purchasing power parity exchange rate equalise between countries?

    • Tax rates
    • Inflation rates
    • Basket cost
    • Interest rates

  3. Why are PPP exchange rates preferred over market rates when comparing living standards?

    • Ignores inflation
    • Measures trade deficits
    • Fixes tax rates
    • Adjusts for prices

  4. A country's GDP is 50 billion local units. At 10 units per dollar PPP, what is dollar GDP?

    • $5 billion
    • $500 billion
    • $500 million
    • $40 billion

  5. Nominal GDP per capita grows by 6% while price inflation is 4%. What is real growth?

    • 24%
    • 10%
    • -2%
    • 2%

  6. Which factor causes GDP per capita comparisons between nations to understate output in developing countries?

    • Government debt
    • Export tariffs
    • Informal economy
    • High inflation

  7. Which environmental cost is ignored when using standard GDP to measure economic welfare?

    • Consumer surplus
    • Import tariffs
    • Resource depletion
    • Tax revenue

  8. Why might GDP figures understate living standards when technological progress occurs rapidly?

    • Higher tax rates
    • Unrecorded quality gains
    • Rising import costs
    • Increased population

  9. Real GDP rises by 3% while population rises by 4%. What happens to real GDP per capita?

    • Falls by 7%
    • Rises by 1%
    • Rises by 7%
    • Falls by 1%

  10. What distribution factor is hidden when comparing living standards between countries using GDP per capita?

    • Tax revenue
    • Income inequality
    • Inflation rate
    • Exchange rate

  11. Why does a large informal economy make GDP per capita an unreliable measure of living standards?

    • High tax rates
    • Unrecorded economic activity
    • Excessive price inflation
    • Rising exchange rates

  12. If real GDP per capita grows by 2% annually for ten years, what is total compounding growth?

    • About 12%
    • About 22%
    • Exactly 20%
    • About 30%

  13. Why does GDP per capita fail to show how living standards are distributed across households?

    • Uses mean averages
    • Excludes price inflation
    • Ignores total population
    • Measures total wealth

  14. A country's GDP per capita at PPP is higher than at market exchange rates. What does this indicate?

    • Lower domestic prices
    • Higher domestic prices
    • Higher exchange rates
    • Lower real output

  15. What economic issue is ignored when measuring changes in average living standards using GDP per capita?

    • Price inflation
    • Income inequality
    • Exchange rates
    • Population size

  16. Country B has 25% higher GDP per capita and twice Country A's population. What is Country B's relative output?

    • 2.0 times larger
    • 1.25 times larger
    • 2.5 times larger
    • 3.0 times larger

  17. Why are market exchange rates limited when comparing national incomes between different countries?

    • Fixed currency values
    • Constant wage rates
    • Static price levels
    • Financial flow volatility

  18. What major limitation of national income data is revealed when GDP per capita rises but life expectancy falls?

    • Ignores price inflation
    • Overstates tax revenues
    • Omits non-monetary welfare
    • Excludes population changes

  19. Which term best describes GDP per capita as a measure of economic welfare?

    • Completely accurate
    • Useful but imperfect
    • Flawless indicator
    • Entirely useless

  20. Which measure is best for comparing real output between countries by eliminating price level differences?

    • PPP-adjusted GDP
    • Nominal GDP
    • Market exchange GDP
    • Gross national income

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