Economics Chapter 2

If 2010 were made the base year for the GDP price deflator index, the value of the index number for 2000 would be:

42

The value of the gross GDP in 2010 in terms of 2000 prices was:

600

Which of the following people would be considered unemployed?

A person who stayed home to raise his children and now starts looking for a job.

Of the following which is the best example of structural unemployment?

A steel worker who is replaced by a robot

If the price index in a country were 100 for the year 2010 and 120 for the year 2015 and nominal GDP in 2015 were $480 billion, then real GDP for 2015 in 2010 dollars would be:

About $400 billion

In the circular flow diagram, which of the following is true in the product market?

Business firms sell goods and services to households.

In the gross domestic product, the largest dollar amount is:

Consumer spending

Which of the following would be an example of an intermediate good or service?

Gasoline purchased by an insurance agent to visit clients at their homes.

Which of the following would be included in the calculation of GDP?

Government purchase of a new submarine

The market value of all final goods and services produced in the economy in a given year is:

Gross domestic product

Which of the following is the best measure of the production of an economy?

Gross domestic product

In the circular flow diagram, which of the following is true in resource markets?

Households sell resources to business firms.

Suppose a factory added $5,000 worth of output this year. Incidentally, the waste from this factory caused $1,000 with of loss to the neighboring waterways. As a result, GDP will

Increase by $5,000

Which of the costs of inflation does the following statement illustrate? "When there is inflation grocery stores have to update the prices associated with the bar codes on their products."

Menu costs

Which of the following purchases is included in the calculation of GDP?

New harvesting equipment for the farm

Which of the following is true if real GDP in year 1 is $5,000 and in year 2 is $5,200?

Output has increased by 4 percent.

Which of the following is leakage from the circular flow of economic activity?

Saving

Which of the following would be counted as investment when calculating GDP?

The construction of a new house

When the actual inflation rate is greater than the anticipated inflation rate, which of the following is most likely to suffer?

Those who lend at a fixed interest rate.

The largest dollar amount of national income is:

Wages and salaries to employees