ECON 102- Exam 2
38) Real GDP A) grows at a constant 3 to 4 percent per year. B) fluctuates from year to year but is always below potential GDP. C) can be called potential GDP when it is adjusted for price changes. D) fluctuates around potential GDP.
D
4) Between September 2013 and September 2014 the number of discouraged workers decreased from 852,000 to 698,000. Assuming the change resulted from discouraged workers starting to make specific efforts to find a job again, this change creates A) a decrease to the U-3 unemployment rate. B) a decrease in the labor force participation rate. C) no change to the U-3 unemployment rate. D) an increase to the U-3 unemployment rate.
D
16) The percentage of people employed aged 16 years and older divided by the working-age population is known as the A) employment-to-population ratio. B) working-age population ratio. C) labor force participation rate D) employment rate
A
36) Assume the inflation rate falls from 4 percent to 2 percent. This means that A) the price level is increasing more slowly. B) real GDP is decreasing. C) the price level has fallen. D) the economy is experiencing deflation.
A
41) The CPI basket contains 400 oranges and 800 pens. In the base year, the price of an orange is $1.00 and the price of a pen is $0.75. This year, urban consumers each buy 300 oranges at $2.00 each and 850 pens at $1.00 each. The CPI this year is ________. A) 140 B) 160 C) 1.60 D) 62.5
B
15) In the above figure, flow B represents ________. A) household purchases of goods and services B) household income C) household borrowing D) firms' payments for labor services
A
1) Gross domestic product is the total ________ produced within a country in a given time period. A) market value of all final goods and services B) market value of all goods and services C) amount of final and intermediate goods and services D) market value of all final and intermediate goods and services
A
11) In the computation of GDP, Social Security payments count as A) transfer payments and are not included in GDP. B) government expenditure on goods and services and are included in GDP. C) government expenditure on goods and services and are not included in GDP. D) transfer payments and are included in GDP.
A
13) If an American firm produces goods that are sold to a German household, then A) U.S. GDP increases. B) the transaction is considered an export in the German GDP accounts. C) German GDP increases but not U.S. GDP. D) net exports in the United States will not change because an export immediately generates an offsetting import.
A
17) Which of the following is NOT part of GDP calculated using the expenditure approach? A) Social Security payments made to the elderly B) the purchase of new homes by consumers C) expenditures by the federal government for national defense D) General Motors' purchases of new capital equipment
A
18) Cyclical unemployment ________. A) decreases during an expansion B) decreases during a recession C) grows at the same rate as potential GDP D) is zero at a business-cycle trough
A
18) Gross private domestic investment is all purchases of newly produced business capital goods and buildings A) plus the change in business inventories plus residential construction. B) plus fixed investment minus inventory investment. C) minus the change in business inventories. D) plus purchases of capital goods produced in previous years to replace any depreciated capital goods.
A
20) Frictional unemployment A) is unemployment associated with normal labor turnover. B) is unemployment associated with declining industries. C) is voluntary part-time unemployment. D) includes discouraged workers.
A
21) The natural unemployment rate A) rises with an increase in structural unemployment. B) rises with a decrease in frictional unemployment. C) rises with an increase in cyclical unemployment. D) falls with an increase in cyclical unemployment.
A
24) Structural unemployment is A) associated with the general decline of specific industries. B) almost always short-term in nature. C) associated with the normal changing of jobs in a dynamic economy. D) associated with the general downturns in the economy.
A
25) When a person reenters the labor force and looks for a job after spending time at home raising a child A) frictional unemployment increases. B) frictional and cyclical unemployment increase. C) cyclical unemployment increases. D) structural unemployment decreases.
A
31) When cyclical unemployment increases and other things remain the same, ________. A) the natural unemployment rate does not change B) the natural unemployment rate increases C) the amount of structural unemployment decreases D) the amount of frictional unemployment increases
A
32) In the 1990s, video recordings were made primarily on tapes. However, in the 2000s DVDs became increasingly popular, leading to a sharp decline in video tapes. As a result, many people who manufactured tapes lost their jobs and didn't have the skills necessary to work making DVDs. This occurrence is best consider an example of A) structural unemployment. B) underemployment. C) frictional unemployment. D) cyclical unemployment.
A
33) Cyclical unemployment is the result of A) the business cycle. B) technological change or foreign competition. C) normal labor market turnover. D) irresponsible workers with poor work habits.
A
35) If the CPI at the end of last year was 100 and the CPI at the end of this year was 115, the inflation rate was A) 15 percent. B) 115 percent. C) 100 percent. D) 1.5 percent.
A
36) A common definition of a recession is a time with A) a decrease in real GDP for two or more successive quarters. B) a decrease in real GDP for two or more successive years. C) a decline in interest rates. D) a decline in the price level.
A
4) An example of "investment" in computing real GDP using the expenditure approach is the purchase of A) a new set of tools by an auto mechanic, for use in repairing cars. B) computer chips by Dell to put in their personal computers. C) a 100 year old house by a married couple. D) 100 shares of IBM stock.
A
40) In the above figure, which point represents the under use of resources? A) point G B) point K C) point F D) point H
A
42) In the above figure, the distance between points S and T represents A) a recession. B) a peak. C) a trough. D) an expansion.
A
44) The use of purchasing power parity prices A) accounts for differences in the prices of the same goods in different countries when measuring real GDP. B) weakens the validity of cross country comparisons of economic welfare. C) increases the amount by which U.S. GDP is larger than that of any other nation. D) decreases the real GDP per person statistics published by the International Monetary Fund.
A
47) If the inflation rate is negative, the price level in an economy is A) falling. B) constant. C) rising rapidly. D) rising slowly.
A
48) The biases in the CPI include the A) new goods, quality change, and substitution biases. B) substitution, new goods, and old goods biases. C) old goods, new goods, and quality change biases. D) old goods, unemployment, and inflation biases.
A
5) The best definition for economic growth is A) a sustained expansion of production possibilities measured as the increase in real GDP over a given period. B) a sustained expansion of consumption goods over a given period. C) a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. D) a sustained expansion of production goods over a given period.
A
50) Real GDP in 2015 is $10 trillion. Between 2015 and 2016, using 2015 prices, GDP grew 3 percent and using 2016 prices real GDP grew 7 percent. Using the chain-weighted output index method of calculating chained-dollar real GDP, real GDP in 2016 is ________ trillion. A) $10.5 B) $10.1 C) $12.72 D) $11
A
6) During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2013, real GDP per person was A) $124. B) $135. C) $117. D) $128.
A
7) From September 2013 to September 2014, the employment-to-population ratio increased from 58.6 percent to 59.0 percent. This change could have been the result of A) a decrease in the working-age population. B) unemployed workers becoming marginally attached workers. C) discouraged workers starting to look for jobs again. D) unemployed workers becoming discouraged workers.
A
9) In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2012 was A) $1,545. B) $1,413. C) $132. D) $380.
A
Discouraged workers 15 Unemployed workers 40 Employed workers 100 Population (16 years and over) 225 3) In the above table, the unemployment rate is A) 29 percent. B) 24 percent. C) 6 percent. D) 18 percent.
A
Discouraged workers 15 Unemployed workers 40 Employed workers 100 Population (16 years and over) 225 6) In the above table, the labor force participation rate is A) 62 percent. B) 55 percent. C) 69 percent. D) 44 percent.
A
Gross investment 1300 Personal consumption expenditure 1475 Depreciation 25 Government expenditure on goods and services 1315 U.S. imports 260 U.S. exports 249 Compensation of employees 65 25) The above table gives data for a hypothetical nation. Gross domestic product is A) $4,079 billion. B) $4,339 billion. C) $4,049 billion. D) $4,054 billion.
A
Net interest 239 Government expenditure on goods and services 136 Compensation of employees 1,735 Rental income 37 Proprietors' income 128 Indirect taxes minus subsidies 259 Corporate profits 194 Exports of goods and services 249 Imports of goods and services 289 Depreciation 333 19) Using the data in the above table, gross domestic product as calculated by the income approach equals ________. A) $2,925 B) $2,205 C) $2,592 D) $2,333
A
Person A Now that the kids are in school for a full day, this person is looking for work and has interviewed for three jobs during the past two weeks. Person B This person has been laid off from a job but expects to be called back as soon as the economy improves. Person C This person has just graduated from college and will start a new job in three weeks. In the meantime this person will tour the great American beaches. Person D This person was laid off last year when new equipment was installed at the plant, reducing the number of workers needed. Shortly after being laid off, this person looked for a new job, was unable to find one and then stopped looking, even though this person still wants a job and is available for work. 9) The above table shows answers given by people interviewed in a government survey of households. Which individual or individuals are considered marginally attached? A) D B) A C) A and D D) B, C, and D
A
Real Wage Rate Quantity Demanded Quantity Supplied 15 70 10 20 60 20 25 50 30 30 40 40 35 30 50 13) The table above shows the labor market for the country of Pickett. When the labor market is in equilibrium, the real wage rate is ________ and ________ of labor a year are employed. A) $30 an hour; 40 billion hours B) any value greater than $30 an hour; any value more than 40 billion hours C) any value less than $25 an hour; any value greater than 40 billion hours D) any value greater than or equal to $25 an hour; any value less than 40 billion hours
A
1) According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE? A) India's PPF has not shifted since 1997. B) India's PPF has been shifting rightward since 1997. C) India has been moving from a point within its PPF to points beyond its PPF. D) India's PPF has been shifting leftward since 1997.
B
11) If the working-age population is 300 million, with 70 million under the age of 16 and institutionalized, another 70 million not in the labor force, 10 million unemployed and 150 million employed, the employment-to-population ratio is A) 93.8 percent. B) 50 percent. C) 53 percent. D) 65.2 percent.
B
11) The country of Kemper is on its aggregate production function at point W in the above figure. The government of Kemper passes a law that makes 4 years of college mandatory for all citizens. After all citizens have their education, the economy will A) remain at point W. B) move to point such as Z. C) move to point such as Y. D) move to point such as X.
B
12) In September 2014, 32 percent of unemployed workers had been unemployed for 6 months or more. This long-term unemployment is of particular concern because A) the labor force participation rate no longer includes these workers in the measurement since they are long-term unemployed. B) long-term unemployment is the most costly type of unemployment. C) the employment-to-population ratio no longer includes these workers in the measurement since they are long-term unemployed. D) the U-3 unemployment rate no longer includes these workers in the measurement since they are long-term unemployed.
B
12) The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will A) move to point such as Z. B) move to point such as X. C) remain at point W. D) move to point such as Y.
B
12) Transfer payments are not included in GDP because A) their market value cannot be accurately determined. B) they are not purchases of goods or services. C) they do not generate additional income. D) their value is included in government expenditure.
B
13) In an economy, 23 million people are employed and 2 million are unemployed, but 5 million part-time workers would prefer full-time work. What is the unemployment rate? A) 25 percent B) 8 percent C) 23.2 percent D) 6.7 percent
B
14) In the above figure, what is the full-employment real wage rate and quantity of hours per year? A) $35 and 100 billion hours per year B) $40 and 60 billion hours per year C) $50 and 100 billion hours per year D) $50 and 40 billion hours per year
B
27) The type of unemployment created by the normal rate of reentry and entry into the labor force is A) structural unemployment. B) frictional unemployment. C) cyclical unemployment. D) seasonal unemployment.
B
29) Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as A) naturally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) structurally unemployed.
B
3) Economic growth is measured by A) changes in the employment rate. B) changes in real GDP. C) changes in nominal GDP. D) All of the above are used to measure economic growth.
B
31) The relationship between real GDP and potential GDP is that A) real GDP never equals potential GDP. B) real GDP fluctuates about potential GDP. C) real GDP is always below potential GDP. D) real GDP always equals potential GDP.
B
32) A business cycle is A) the cyclical movement in the interest rates. B) the pattern of short-run upward and downward movements in total output. C) the cyclical change in the nation's balance of trade. D) the increase in consumer spending that accompanies an increase in disposable income.
B
33) ________ refers to a period when the ________ decreases. A) Recession; growth rate of nominal GDP B) Productivity growth slowdown; growth rate of output per person C) Recession; growth rate of output per person D) Productivity growth slowdown; growth rate of real GD
B
34) The four parts of the business cycle occur in the following order A) expansion, trough, peak, recession. B) recession, trough, expansion, peak. C) recession, trough, peak, expansion. D) expansion, trough, recession, peak.
B
4) Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person? A) 35 years B) 70 years C) 10 years D) 100 years
B
46) At the end of last year, the CPI equaled 120. At the end of this year, the CPI equals 132. What is the inflation rate over this year? A) 12 percent B) 10 percent C) 6 percent D) None of the above answers are correct because more information is needed to calculate the inflation rate.
B
5) Gross domestic product is a measure of the total value of all A) sales in an economy over a period of time. B) final goods and services produced in an economy over a period of time. C) capital accumulation in an economy over a period of time. D) consumer income in an economy over a period of time.
B
5) Which of the following people would be considered unemployed by the Bureau of Labor Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job. II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months. A) I only B) II only C) both I and II D) neither I nor II
B
7) If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP ________ and U.S. GDP ________. A) does not change; increases B) increases; does not change C) increases; decreases D) increases; increases
B
Corporate profits $200 Net interest 150 Indirect taxes less subsidies 230 Depreciation 250 Compensation of employees 1,350 Proprietor's income 150 Rental income 70 Personal consumption expenditures 1,400 Government expenditure on goods and services 500 Net exports of goods and services 40 46) Using the data in the above table, gross private domestic investment equals A) $260. B) $460. C) $250. D) some amount that cannot be determined without more information.
B
Government expenditure on goods and services 250 Compensation of employees 1,675 Gross private domestic investment 325 Rental income 20 Personal consumption expenditures 1425 Net interest 40 Net exports of goods and services 100 Indirect business taxes and depreciation 300 27) The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion. A) $2050 B) $2100 C) $1850 D) $2000
B
Millions of dollars Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 Depreciation 6 21) Using the information in the table above, calculate the value of GDP. A) $195 million B) $140 million C) $185 million D) $145 million
B
Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 26) Use the information in the table above to calculate the value of net exports. A) -$10 million B) $10 million C) $30 million D) $0
B
10) If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the unemployment rate is A) 7.1 percent. B) 6.6 percent. C) 9.1 percent. D) 10 percent.
C
10) Transfer payments A) refer to all payments made to households by governments. B) are included in the government expenditure category in gross domestic product. C) refer to payments made by the government that are not made to purchase a good or service. D) are made by households to firms in exchange for goods and services.
C
16) A new 2015 Honda Civic produced in 2015 and purchased in 2016 is A) part of GDP in 2016. B) not part of GDP in either year because it was produced in one year and sold in another year. C) part of GDP in 2015. D) part of GDP in both 2015 and 2016.
C
2) Discouraged workers ________ counted as officially unemployed because they ________. A) are not; are not qualified to work B) are; are not working C) are not; are not actively seeking work D) are; are still in the labor force
C
2) Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is A) negative. B) constant. C) decreasing. D) increasing.
C
22) Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment rate? A) 5 percent B) 7 percent C) 4 percent D) 3 percent
C
23) GDP can be computed as the sum of A) all sales that have taken place in an economy over a period of time. B) the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. C) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time. D) the total expenditures of consumers and business over a period of time.
C
26) The unemployment rate is at the natural unemployment rate when A) structural unemployment equals zero. B) frictional unemployment equals zero. C) cyclical unemployment equals zero. D) all types of unemployment equal zero.
C
3) If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany A) Germany's GDP decreases. B) U.S. net exports is positive. C) U.S. GDP decreases because net exports are negative. D) U.S. GDP increases because it sells more Explorers.
C
30) Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts? A) drapes to brighten up the president's office B) new computer hardware for use by the IRS C) Social Security expenditures D) gasoline purchases for government car pools
C
34) When a worker quits a job to look for a better job A) structural and cyclical unemployment increase. B) structural unemployment decreases. C) frictional unemployment increases. D) cyclical unemployment increases.
C
37) Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare? A) Real GDP does not take into account the value of people's leisure time. B) Real GDP does not include the underground economy. C) Real GDP overvalues household production. D) Real GDP omits measures of political freedom.
C
39) Recessions are commonly defined to occur A) when growth in real GDP decreases for two consecutive quarters. B) when the unemployment rate exceeds 6 percent. C) when growth in real GDP is negative for two consecutive quarters. D) whenever unemployment increases.
C
39) Suppose that the price level was 100 in 2011, 110 in 2012, and 130 in 2013. Over these three years A) deflation occurred at an accelerating rate. B) prices were stable. C) the inflation rate was positive and accelerating. D) the inflation rate was positive but slowing.
C
43) The cost of inflation to society includes I. the opportunity costs of resources used by people to protect themselves against inflation. II. the diversion of productive resources to forecasting inflation. A) I only B) II only C) both I and II D) neither I nor II
C
44) An example of the new goods bias in the CPI is the A) introduction of higher quality brakes as standard equipment on new cars. B) decreasing popularity of SUVs as the price of gasoline has risen. C) introduction of hybrid automobiles, vehicles that were not made until recently. D) switch from traditional car dealerships to low-cost Internet car buying services.
C
45) The Consumer Price Index is a measure of the average of the prices paid by ________ for a fixed basket of consumer goods and services. A) all consumers B) consumers living in cities with a population greater than 100,000 C) urban consumers D) urban wage earners and clerical workers
C
48) The chain-weighted output index method of calculating chained-dollar real GDP compares A) prices at different points in time using a sample of goods that is representative of goods purchased by households. B) quantities produced in different years with the prices that prevailed during the year in which the output was produced. C) compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output. D) quantities produced in different years using prices from a year chosen as a reference period.
C
49) The chain-weighted output index method (of calculating chained-dollar real GDP) ________. A) is used to calculate the value of nominal GDP B) shows that real GDP increases every year C) uses the prices of two adjacent years to calculate the real GDP growth rate D) values the quantities produced in a year at the prices of the base year
C
50) Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years? A) 5.1 percent B) 6.7 percent C) 5.4 percent D) 30.7 percent
C
7) During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2014, real GDP per person was A) $135. B) $117. C) $128. D) $124.
C
9) Intermediate goods are excluded from GDP because A) they represent goods that have never been purchased so they cannot be counted. B) the premise of the question is incorrect because intermediate goods are directly included in calculating GDP. C) their inclusion would involve double counting. D) their inclusion would understate GDP.
C
Under 16 50 Working full-time 90 Working part-time 30 Retired 40 Unemployed 5 1) Using the data in the above table, the labor force participation rate is A) 58.1 percent. B) 96.0 percent. C) 75.7 percent. D) 66 percent.
C
Billions of dollars Personal income 1,200 Net domestic income at factor cost 2,100 Government expenditure on goods and services 400 Depreciation 200 Gross private domestic investment 100 Indirect taxes 600 Subsidies 100 20) The above table shows some national income accounting data for a nation. In this nation, gross domestic product is equal to ________ billion. A) $2,300 B) $2,000 C) $2,800 D) $2,500
C
Item Quantity Price Quantity Price Books 10 $30 8 $50 Pens 20 $1 15 $2 37) In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the cost of the CPI basket in 2013? A) $320 B) $335 C) $540 D) $430
C
Person A This person has just graduated from high school and is working at a part-time job but wants a full-time job. Person B At the age of 45, this person was laid off from the automobile industry when new equipment was installed and the person did not have the skills necessary to use the equipment. This person now is searching to find a new job. Person C As a result of this person's spouse being transferred to a job in a new city, this person is looking for a new job. Person D This person just graduated from college and is looking for an engineering job. In the meantime, this person is working full-time waiting tables. 28) The above table shows answers given by people interviewed in the Current Population Survey. Which people are structurally unemployed? A) A, B, and C B) A, B, C, and D C) B and C. D) A, B, and D
C
Personal consumption expenditure 3,720 Government expenditure 430 Gross investment 610 Net investment 520 Exports 650 Imports 720 45) Using the information in the table above, depreciation equals A) -$90 billion. B) -$70 billion. C) $90 billion. D) some amount that cannot be determined.
C
10) Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap? A) never B) in 10 years C) in 2 years D) in 15 years
D
14) Net investment is the A) value of software and other network related products. B) profit or loss in the stock market. C) value of the depreciated capital multiplied by the changes in the price level. D) total amount of gross investment minus depreciation.
D
15) In the above figure, at a wage rate of $20 per hour A) the labor supply curve will shift rightward. B) there is a shortage of labor. C) the labor demand curve will shift rightward. D) there is a surplus of labor.
D
15) Which of the following is NOT included in the working-age population? A) retirees under the age of 55 B) people waiting to be called back to a job after being laid off C) discouraged workers D) people in prison
D
17) Which of the following decreases the official U-3 unemployment rate? A) More women enter the labor force and seek jobs. B) Workers leave the labor force. C) Young people graduate from college and start to look for their first full-time job. D) None of the above because they all increase or do not change the unemployment rate.
D
19) When the economy is operating at full employment, the natural unemployment rate consists of only A) structural and cyclical unemployment. B) frictional and cyclical unemployment. C) cyclical unemployment. D) frictional and structural unemployment.
D
2) GDP equals A) aggregate income. B) aggregate expenditure. C) the value of the aggregate production in a country during a given time period. D) all of the above.
D
22) Last year in the country of Nerf imports equaled exports. Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were ________. A) $900 million B) zero C) $500 million D) $100 million
D
23) An individual is structurally unemployed if A) the individual wants to work just during certain months of the year. B) there is a recession and the individual is laid off. C) the individual quits a job in order to search for a better one. D) the individual lacks marketable job skills because technology has changed.
D
24) In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies ________. A) cannot be calculated B) are $1 million C) are -$0.5 million D) are $0.5 million
D
29) In the calculation of gross domestic product by the expenditure approach, the "investment" component is A) net investment. B) gross investment plus depreciation. C) gross investment minus depreciation. D) gross investment.
D
30) Structural unemployment is the result of A) normal labor market turnover. B) a slowdown in the rate of economic expansion. C) irresponsible workers with poor work habits. D) technological change or foreign competition.
D
35) Real GDP decreases during A) the movement from below potential GDP back to potential GDP. B) the movement from trough to peak. C) a decrease in unemployment. D) the movement from peak to trough.
D
41) Reported GDP increases when, in fact, total production is unchanged when I. there is a shift from household production to market production. II. a previously illegal activity is legalized. A) I only B) II only C) neither I nor II D) both I and II
D
43) When calculating GDP, underground economic activity is A) an aspect of the quality of life, such as health and life expectancy. B) that portion of the time when we are enjoying leisure activities and not producing marketable goods. C) the production of goods and services in the home. D) the part of the economy purposely hidden.
D
47) The chain-weighted output index (method of calculating chained-dollar Real GDP) A) must be calculated only every other year. B) uses only the current year's prices to calculate growth in real GDP. C) is an inaccurate way to measure growth in real GDP and so has been replaced by the "nominal-to-real" index. D) uses prices for the current year and the previous year to calculate growth in real GDP.
D
49) If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals A) 200. B) 450. C) 325. D) 225.
D
6) Gross domestic product is the A) total amount that buyers spent on the final goods and services produced in a country during a specific time. B) total amount of income earned in producing the final goods and services in a country during a specific time. C) value of the final goods and services produced in a country during a specific time. D) All of the above answers are correct.
D
8) Gross investment equals net investment plus A) dividends paid to the owners of the company. B) capital gains. C) capital. D) depreciation.
D
8) In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012? A) 8.3 percent B) 3.8 percent C) 0.38 percent D) 9.0 percent
D
Item Quantity Price Quantity Price Books 10 $30 8 $50 Pens 20 $1 15 $2 40) In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the CPI in 2013? A) 59 B) 102 C) 129 D) 169
D
Item Quantity Price Quantity Price Books 10 $30 8 $50 Pens 20 $1 15 $2 38) In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the CPI in 2012? A) 320 B) 3.20 C) 1.00 D) 100
D
Personal consumption expenditure 3,720 Government expenditure 430 Gross investment 610 Net investment 520 Exports 650 Imports 720 28) Using the information in the table above, net exports equals A) $650 billion. B) $1,370 billion. C) $70 billion. D) -$70 billion.
D
Total population (millions) 80 Currently employed (millions) 40 Not working and looking for work (millions) 2 Want to work but no longer looking for work (millions) 4 14) In the table above, the size of the labor force is A) 80 million. B) 40 million. C) 46 million. D) 42 million.
D
Total population 2600 Working-age population 2000 Not in labor force 500 Employed 1300 8) Using the information in the table above, calculate the employment-to-population ratio. A) 50 percent B) 23.2 percent C) 75 percent D) 65 percent
D
Year Price index Inflation rate (percent) 1 100 2 117 A 3 125 B 4 120 C 42) In the table above, what inflation rate belongs in space B? A) 8.3 percent B) 17.0 percent C) -4.0 percent D) 6.8 percent
D
