Unit 2

In 2007, the nominal gross domestic product (GDP) was $50 billion and the GDP deflator was 200, Thus real GDP was

$25 billion

The table above shows the consumer price index for selected years. On the basis of these data, how much did it cost in 1995 to buy the same goods and services that cost $50 in 1929?

$300

The country's gross domestic product is

220 billion

Based on the information in the table above, what is the unemployment rate for Country X?

6%

Which of the following groups of people would benefit from unanticipated inflation? I. Savers II. Borrowers III. Lenders

II. Only

The official, unemployment rate understates the unemployment level in the economy because the official unemployment rate

Ignores underemployed and discouraged workers

Which of the following can be concluded about the consumer price index (CPI) for this individual from 1993 to 19947

It increase by 25%

Which of the following best explains Why transfer payments ere not included in the calculation of gross domestic product?

Recipients of transfer payments have not produced or suppled goods and services in exchange for these payments.

If 2012 is the base year, which of the following is true?

The CPI in year 2013 is 120

The value of which of the following is counted in the United States gross domestic product?

A car produced in the U.S and sold in Europe

Which of the following allows an individual to gain from unexpected inflation?

Borrowing money at a fixed interest rate

In the measurement of gross domestic product, investment includes spending by

Businesses on capital goods and changes in Inventories

Which of the following explains why the rate of change of the consumer price index (OPI) tends to overstate the actual inflation rate:

Consumers tend to substitute lower-priced goods that may not be represented in the basket of goods

If nominal gross domestic product fell while real gross domestic product rose, which of the following must be true?

The inflation rate was negative

Which of the following is true according to the circular flow model?

Households are demanders in the product markets and suppliers in the factor markets

Which of the following will be counted as unemployed by the United States Bureau of Labor Statistics?

Persons who were fired from their previous jobs and are actively applying for work

The consumer price index measures which of the following?

The change over time of the weighted prices of a particular group of goods and services

Which of the following can be concluded from the data above?

The economy was experiencing inflation during years 2 and 3

Which of the following best describes an economy at full employment?

There is frictional, but not cyclical, unemployment.

A lender will realize unexpected benefit when the

actual inflation rate is lower than the anticipated inflation rate

In one year, spending on consumption, investment, and government purchases was equal to 103 percent of a country's gross domestic product. This would be possible only if

net exports were negative

If unemployed workers become discouraged and give up trying to find work, the number of workers employed and the unemployment rate would change in which of the following ways?

no change - decrease

The consumer price index (CP) is criticized for

overstating the true burden of inflation because it does not recognize consumers' ability to substitute goods and services as prices change

If an economy is at the peak of the business cycle, then which of the following is true about the state of the economy?

there is an inflationary gap

The natural rate of unemployment is the unemployment rate when

there is no cyclical unemployment