Macro Unit 2.3
Suppose that personal income is $3,500 billion, personal taxes are $1,000 billion, and depreciation is $500 billion. Disposable income is equal to which of the following?
$2,500 billion
In 2016 the nominal GDP for Country X was $330 billion and the GDP deflator was 110. The real GDP for 2016 was
$300 billion
Which of the following groups would most likely gain from unanticipated inflation?
Individuals who have borrowed money at fixed interest rates
Which of the following is true about the real GDP?
It measures aggregate output using constant prices.
Which of the following unemployed individuals represents frictional unemployment?
Janet, an accounting graduate who is interviewing with a number of accounting firms.
As a measure of economic performance, GDP accounts for which of the following?
Souvenir gifts purchased by tourists domestically
If nominal gross domestic product fell while real gross domestic product rose, which of the following must be true?
The inflation rate was negative.
The official unemployment rate understates the unemployment level in the economy because the official unemployment rate
ignores underemployed and discouraged workers
The circular flow model illustrates the equality of which of the following?
total expenditure and total income
Which of the following is an example of frictional unemployment?
A person quits a job to search for another job.
Which of the following is included in the computation of gross domestic product?
Additions to business inventories
Which of the following will happen if the actual inflation rate is greater than the expected inflation rate?
Borrowers of fixed interest rate loans will be better off.
Which of the following allows an individual to gain from unexpected inflation?
Borrowing money at a fixed interest rate
Which of the following explains why the rate of change of the consumer price index (CPI) tends to overstate the actual inflation rate?
Consumers tend to substitute lower-priced goods that may not be represented in the basket of goods.
Which type of unemployment would increase if workers lost their jobs because of a recession?
Cyclical
Which of the following statements about the simple circular flow model of a market economy is correct?
Households are on the demand side of the product market and the supply side of the resource market.
In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina's nominal income and real income change in 2018 compared to 2017?
Nominal income increased and real income increased.
When the average price level increases by 10 percent in a given year, which of the following must increase by 10 percent for real output to remain constant?
Nominal national income
Which of the following situations will benefit lenders of fixed interest rate loans?
The actual inflation rate is less than the expected inflation rate.
If a nation's actual real GDP is less than potential real GDP, which of the following must be true?
The actual rate of unemployment exceeds the natural rate of unemployment.
Potential gross domestic product will decrease under which of the following conditions?
The country's annual depreciation is greater than its annual gross investment.
GDP does NOT account for which of the following?
The depletion of natural resources
Which of the following transactions will be included in the calculation of Country X's Gross Domestic Product (GDP) in 2020?
The purchase of new construction equipment
Gross domestic product is equal to which of the following?
The sum of income paid to all the factors of production
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.
When an economy is in equilibrium at potential gross domestic product, the actual unemployment rate is
equal to the natural rate
The consumer price index (CPI) is criticized for
overstating the true burden of inflation because it does not recognize consumers' ability to substitute goods and services as prices change
The unemployment rate measures the percentage of
people in the labor force who do not have jobs
The unemployment rate is calculated as
the number of people not working but actively seeking employment divided by the number of people in the labor force
The official unemployment rate is not an accurate indicator of actual unemployment in the economy because
the official rate does not include persons who have given up looking for work