AP Macro Econ Chapter 24-26 Practice Test

A nation has a working-age population of 100 million, with 80 million working and 5 million unemployed and seeking work.The labor force participation rate is A. 85% B. 80% C. 75% D. 5% E. 100%

A

A nation has a working-age population of 95 million, with 5 million not working and not looking for employment and 81 million employed. The unemployment rate is A. 10% B. 88% C. 14.7% D. 93% E. 5.2%

A

A wealthy owner of the local soccer team pays a construction company to build a new stadium for the team. The stadium would count in GDP as A. Investment spending B. Government spending C. Consumption spending D. Export spending E. Import spending

A

Barb receives a retirement pension that is indexed annually for inflation. This means that her pension payments are A. Adjusted for inflation to maintain her purchasing power B. Adjusted for inflation to increase her purchasing power C. Unadjusted for inflation D. Adjusted for inflation to decrease her real income E. Adjusted for inflation to increase her real income

A

Usually when the business cycle is in the ________________ stage, the inflation rate is _______________. A. Contraction; falling B. Expansion; rising C. Trough; at its lowest D. Trough; at its highest E. Trough; equal to zero

A

When unemployment workers are seeking positions that are a better fit for the skills of those workers, it is called _______________________ unemployment. A. Frictional B. Seasonal C. Structural D. Operational E. Cyclical

A

A nation has a working-age population of 100 million, with 85 million working and 10 million unemployed and not seeking work. The labor force participation rate is A. 85% B. 90% C. 10% D. 95% E. 11.1%

B

A nation has a working-age population of 200 million, with 14 million not working and not looking for work and 170 million employed. The labor participation rate is A. 7% B. 93% C. 85% D. 92% E. 8%

B

A nation's measure of the national output is typically weakest during which stage of the business cycle? A. Peak B. Trough C. Expansion D. Growth E. Inflationary

B

In a specified period of time, a nation's GDP is the A. total value of government spending, minus taxes collected B. Total value of all final goods and services produced within the nation's borders C. Total value of all intermediate goods and services produced within the nation's borders D. Total disposable income earned by households in the nation E. Total value of all final goods and services produced by a nation's citizens, regardless their geographical location

B

Ros is a ski instructor during the winter but finds herself without a job when the ski resort closes for the summer. Ros is currently A. Structurally unemployed B. Seasonally unemployed C. Out of the labor force D. Functionally unemployed E. Cyclically unemployed

B

Select the choice that would cause a rightward shift in the demand for good X A. A higher price of good X B. Stronger consumer tastes and preferences for good X C. Improved technology used to produce god X D. A lower price of an input used in the production of good X E. A lower price of a substitute for good X

B

Which of the following would be classified as consumption spending? A. The state buying police cars B. Ellie enrolling in college classes C. Firm in Canada buying cattle raised in the US D. Cattle rancher in US builds new barn E. US air force builds a new base in the US

B

Cans of chili are produced in December of 2011 but not sold to stores until January 2012. The unsold chili counts in A. 2011 GDP as inventories and are part of consumption spending B. 2011 GDP as consumption spending C. 2011 GDP as inventories and are part of investment spending D. 2012 GDP as inventories and are part of investment spending E. 2011 GDP as intermediate goods and 2012 GDP as final goods

C

Suppose the economy is experiencing a very strong expansionary stage of the business cycle. Which of the following is likely true? A. National income is falling B. Employment rate is falling C. GDP is falling D. Unemployment rate is rising E. Inflation rate is falling

C

The demand for pie will increase if A. The price of sugar used to make pie increases. B. Income increases and pie is an inferior good C. Income increases and pie is a normal good D. The medical community reveals that pie is harmful to our health E. The price of pie rises

C

Use the table linked here: https://drive.google.com/open?id=0B939vwE8aMrNa0hITG11XzJFSVU The bundle of goods that is purchased by a typical consumer in any given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols. What is the cost of a bundle of goods in 2001? A. $9.35 B. $7.64 C. $49.80 D. $79.36 E. $16.50

C

When workers lose their jobs because there is no longer a demand for their particular skill, it is called __________________ unemployment. A. Frictional B. Seasonal C. Structural D. Operational E. Cyclical

C

You are told that the unemployment rate is 8%. This means that A. 92% of the working-age population is employed B. 8% of the working-age population is unemployed and seeking work C. 8% of the labor force is unemployed and seeking work D. 92% of the population is employed E. 9% of the population is unemployed and seeking work

C

A laptop bought by you is _______________ spending and the same laptop bought by the FBI is ________________ spending. A. Import;export B. Consumption;investment C. Consumption;consumption D. Consumption;government D. Export;import

D

Andrew has a student loan that he pays a fixed 5% annual interest on. If all prices in the economy decline by 10%, Andrew is A. Better off, since he can now purchase 5% more goods and services B. Better off, since he can now purchase 10% more goods and services C. Worse off, since he now effectively pays 10% interest D. Worse off, since he now effectively pays 15% interest E. Unaffected, as he is not the lender of the $

D

Suppose we know that GDP is $10,000 and that consumption spending is $7,000, investment spending is $1,500, and government spending is $2,500. We can determine that A. Net exports are equal to -$100 B. Export spending is $1,000 and import spending is $0 C. Export spending is $1,000 and import spending is $1,000 D. Next exports are equal to -$1,000 E. Net exports are equal to $1,000

D

The sum of the employed persons and the unemployed persons is referred to as A. Employment rate B. Unemployment rate C. Labor force participation rate D. Labor force E. Those out of the labor force

D

Typically the rate of inflation begins to increase at what stage of the business cycle? A. Depression B. Contraction C. Trough D. Expansion E. Peak

D

When the business cycle is in the ________________ stage, the unemployment rate is ______________. A. Contraction; falling B. Expansion; rising C. Trough; at its lowest D. Trough; at its highest E. Trough; equal to zero

D

When workers lose their jobs because the economy is experiencing a recession, it is called ______________________- unemployment. A. Seasonal B. Frictional C. Structural D. Cyclical E. Political

D

Which of the following is the formula for calculating the rate of inflation between two years, year 1 and year 2? A. 100 X (CPI - CPI - CPI ) base year year1 year2 B. 100 X (CPI - CPI )/CPI year1 year2 base year C. 100 X (CPI - CPI ) year2 year 1 D. 100 X (CPI - CPI )/CPI year2 year1 year1 E. 100 X (CPI - CPI ) X CPI year2 year1 year1

D

Which of the following is true of the CPI? A. It's calculated using the same prices for the different goods that consumers buy each year B. It's calculated using different prices for a different bundle of good that consumers buy each year C. It's calculated using prices from the 3-year period 1982-1984, using different goods each year D. It contains the same bundle of goods every year, a bundle that is adjusted periodically, but adjusts prices for the goods in the bundle each time it is calculated E. It's calculated using a bundle of goods based on consumption patterns from 1982-1984 using different prices for each year.

D

A nation has a working-age population of 200 million, with 14 million not working and not looking for employment and 170 million employed. The unemployment rate is A. 7% B. 93% C. 85% D. 92% E. 8.6%

E

Grover was released from his sales job at the auto dealership when the economy slipped into a recession. Grover is classified as A. Structurally unemployed B. Seasonally unemployed C. Out of the labor force D. Functionally unemployed E. Cyclically unemployed

E

Use table linked here: https://drive.google.com/open?id=0B939vwE8MrNb05OLUJ0NEIaUWc What is the GDP in 2011? A. $162 B. $100 C. $164 D. $84 E. $82

E

Use the table linked here: https://drive.google.com/open?id=0B939vwE8aMrNa0hITG11XzJFSVU The bundle of goods that is purchased by a typical consumer in any given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols. If 2000 is the base year, what is the consumer price index (CPI) in 2001? A. 33.30 B. 49.80 C. 16.50 D. 66.87 E. 149.55

E

What is the interpretation of a CPI of 122 in year X? A. A bundle of goods in year X costs $22 more than in the base year B. A bundle of goods in year X costs $122 more than in the previous year C. A bundle of goods in year X costs 122% more than in the base year D. A bundle of goods in year X costs 22% more than the previous year E. A bundle of goods in year X costs 22% more than in the base year

E

Which of the following would be an intermediate good? A. A visit to the doctor before a tropical vacation B. Your vacation to the island of Yap C. A new skateboard your brother bought D. Gasoline purchased for your car E. Coal used to generate electricity

E