Macro Unit 2

If the nominal GDP in a given year is $300 billion and the GDP deflator for that year is 120, how much is the real GDP?

$250 billion

Which of the following is true regarding GDP?

GDP, adjusted for inflation, measures economic growth over time

Assume the price of a specific market basket in the year 2010 was $200 and the price of the same market basket in the year 2015 was $240. What is the CPI of the year 2015 based on base year 2010 prices?

120

The nominal GDP for the year 2010 is $120 billion and the nominal GDP for the year 2012 is $240 billion. Assuming that the year 2010 is the base year and that the real GDP of the year 2012 is $200, what is the GDP deflator in 2012?

120

If the price of a specific market basket in the year 2008 was $240 and the price of the same market basket in the year 2013 was $300. What is the Consumer Price Index (CPI)of the year 2013 based on base year 2008 prices?

125

Which type of unemployment would most likely increase if workers are laid off due to a large decrease in consumer spending?

Cyclical

Which of the following is a reason why one nation's economic growth rate might be higher than another nation?

Larger per capita government subsidies for education and worker training programs

Which of the following is true regarding full employment?

Full employment occurs when there is no cyclical unemployment

Which of the following is NOT a criticism of gross domestic product (GDP) as a measure of a nation's well-being?

GDP measures only the value of final goods and services and not intermediate goods and services.

Which of the following is true regarding the consumer price index (CPI)

The CPI measures prices of a specific market basket of goods and services

If a nation's nominal gross domestic product (NGDP) increased by 6%, while its real rate of GDP growth (RGDP) was 2%, which of the following must be true?

The GDP deflator increased by 4%

Which of the following is the best example of structural unemployment?

Workers are fired because they do not have the specific skills employers value

Which of the following groups would benefit in the short run from an unanticipated rise in the inflation rate?

Young people repaying fixed interest rate student loans

Which of the following is an example of cyclical unemployment?

Zelda lost a job with the recent downturn in the economy.

If the nominal GDP in a given year is $500 billion and the GDP deflator for that year is 125, how much is the real GDP?

400 billion

Which of the following is clearly not included in the calculation of GDP for the United States?

A government payment to an individual on welfare

Which of the following individuals is clearly considered unemployed?

A lawyer that sold his firm and is now looking for a job as a teacher

Which of the following is included in the calculation of the U.S. GDP?

A plane produced in the U.S but sold in Mexico

Which of the following is an example of frictional unemployment?

A recent graduate, looking for their first job

Which of the following best describes the concept of inflation?

A steady rise in the general level of prices

Which of the following is the best example of structural unemployment?

A worker is replaced by machines that are cheaper and more productive.

Which of the following is true regarding the quantity theory of money?

An increase in money supply or the velocity of money will increase nominal output

Which of the following is true regarding the quantity theory of money?

An increase in money supply or velocity of money will increase nominal GDP

Which of the following will most likely decrease a country's Natural Rate of Unemployment (NRU)?

An increase in the unemployment benefits paid by the government

Which of the following is the best example of structural unemployment?

Assembly lines workers are replaced by robots

When calculating GDP, investment is best defined as

Business spending on capital goods

When calculating GDP, the word investment is best defined as

Business spending on capital goods

Which of the following best defines investment as a component of GDP?

Buying new plants, machinery, tools and inventory

If a worker receives a raise in their nominal wage from $10 to $15 per hour and the inflation rate increases from 2% to 4%, the worker's real wage has approximately

Decreased by 50%

A recession is commonly defined as two consecutive quarters of

Decreasing real GDP

A slowdown in the rate of increase in price level is called

Disinflation

An increase in which of the following would likely lead to a decrease in national income?

Imports

Which of the following is true regarding inflation?

Inflation decreases the purchasing power of a country's currency

The Consumer Price Index

Is one of the several price indices that measures prices of time

Assume a recession causes jobless workers to grow more discouraged and give up their search for work. What will be the resulting change in the labor force participation rate and unemployment rate?

Labor Force: Decrease Unemployment Rate: Decrease

A decrease in which of the following might cause a decrease in real per capita income?

Output per unit of input

Which of the following is most likely to improve an economy's productivity?

Positive net capital stock investment

If society experiences an increase in human capital but nominal wages remain the same, what will happen to real gross domestic product (RGDP) and real wages?

RGDP: Increase Real Wages: Increase

All of the following are criticisms of how the government measures the economy except

Real GDP overstates economic growth since it doesn't account for changes in price level

The income approach to calculating GDP mostly involves adding

Rent, wages, interest, and profit

The value of which of the following is counted in the U.S. GDP?

Salary bonuses given to investment bankers

The value of which of the following is counted in the US GDP?

Salary bonuses given to investment bankers

Workers who have lost their jobs because of technological improvements in the economy are said to be

Structurally unemployed

If a country's percent change in real GDP is positive, which of the following must be true?

The country is producing more output

The national rate of unemployment is

The rate of unemployment when the economy is in long run equilibrium

If a country's nominal percent change in GDP is positive, which of the following must be true?

The real GDP and/or the price level has increased

If the labor force participation rate increased at the same time that the unemployment rate stayed the same, which of the following must be true?

The total number of jobs in the economy increased

If unemployed workers become discouraged and give up trying to find work, which of the following is true?

The unemployment rate would decrease

Real gross domestic product (RGDP) is defined as

The value, adjusted for changes in price level, of all final goods and services produced within a nation's borders in a given year.

Full employment takes place when

the economy is experiencing structural and frictional unemployment only