ECON 102 Practice Exam 2
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) $1,545.
50) Real GDP in 2015 is $10 trillion. Between 2015 and 2016, using 2015 prices, GDP grew 3 percent and using 2016 prices realGDP 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) $10.5
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) $124.
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) $2,925
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) $4,079 billion.
31) The equilibrium price in the above figure is A) $6. B) $4. C) $2. D) $8.
A) $6
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) 15 percent.
3) In the above table, the unemployment rate is A) 29 percent. B) 24 percent. C) 6 percent. D) 18 percent.
A) 29 percent
6) In the above table, the labor force participation rate is A) 62 percent. B) 55 percent. C) 69 percent. D) 44 percent.
A) 62 percent.
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) D
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) Social Security payments made to the elderly
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) U.S. GDP increases.
Which of the following will NOT shift the supply curve for pick-up trucks? A) a change in the price of pick-up trucks B) an increase in the price of a resource used to produce pick-up trucks C) a technological advance D) a change in the number of firms supplying pick-up trucks
A) a change in the price of pick-up trucks
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) a decrease in real GDP for two or more successive quarters.
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) a decrease in the working-age population.
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) a new set of tools by an auto mechanic, for use in repairing cars.
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) a recession.
38) In the above figure, a price of $15 per dozen for roses would result in A) a shortage. B) equilibrium. C) a surplus. D) downward pressure on prices.
A) a shortage.
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) a sustained expansion of production possibilities measured as the increase in real GDP over a given period.
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) accounts for differences in the prices of the same goods in different countries when measuring real GDP.
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) associated with the general decline of specific industries.
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) decreases during an expansion
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) employment-to-population ratio.
43) The table gives the demand and supply schedules for boat rides. If the supply of boat rides increases by 20 rides a day, the price will A) fall to $6 a ride. B) rise to $10 a ride. C) rise to $6 a ride. D) remain unchanged.
A) fall to $6 a ride.
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) falling.
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) frictional unemployment increases.
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) household purchases of goods and services
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) is unemployment associated with normal labor turnover.
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) market value of all final goods and services
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) new goods, quality change, and substitution biases.
50) In the figure, the equilibrium price is initially $3 per bushel of wheat. If suppliers come to expect that the price of a bushel of wheat will rise in the future, but buyers do not, the CURRENT equilibrium price will A) not change. B) fall. C) rise. D) Perhaps rise, fall, or stay the same, depending on whether there are more demanders or suppliers in the market.
A) not change.
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) plus the change in business inventories plus residential construction.
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) point G
If there exists a shortage in the market for snowmobiles, then the price of a snowmobile will A) rise. B) fall. C) neither rise nor fall. D) at first fall then rise.
A) rise.
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) rises with an increase in structural unemployment.
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) structural unemployment.
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) the business cycle.
For consumers, goods A and B are complementary goods. The cost of a resource used in the production of A decreases. As a result A) the equilibrium price of B will rise and the equilibrium price of A will fall. B) the equilibrium price of B will fall and the equilibrium price of A will rise. C) the equilibrium prices of both A and B will rise. D) the equilibrium prices of both A and B will fall.
A) the equilibrium price of B will rise and the equilibrium price of A will fall.
A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates A) the law of supply. B) a change in supply. C) the nature of an inferior good. D) the law of demand.
A) the law of supply.
A rise in the price of a good causes producers to supply more of the good. This statement illustrates A) the law of supply. B) the nature of an inferior good. C) a change in supply. D) the law of demand.
A) the law of supply.
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) the natural unemployment rate does not change
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) the price level is increasing more slowly.
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) transfer payments and are not included in GDP.
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 million
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) $140 million
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) $2100
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) $460.
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) 10 percent
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) 160
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) 93.8percent. B) 50 percent. C) 53 percent. D) 65.2percent.
B) 50 percent.
35)The figure illustrates the market for pens. The equilibrium quantity is A) between 400 and 600 pens, but it is impossible to be precise. B) 500 pens a month. C) 5 pens a month. D) 2 pens a month
B) 500 pens a month.
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) 70 years
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) 8 percent
46) The above figure shows the market for pizza. Which figure shows the effect of a decrease in the price of a hamburger, which for consumers is a substitute for pizza? A) Figure A B) Figure B C) Figure D D) Figures B and C
B) Figure B
47) The above figure shows the market for hamburger. Which figure shows the effect of an announcement by the U.S. Food and Drug Administration (FDA)that eating hamburger causes early death? A) Figure A B) Figure B C) Figure C D) Figure D
B) Figure 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) II only
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) India's PPF has been shifting rightward since 1997.
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 GDP
B) Productivity growth slowdown; growth rate of output per person
Which of the following raises the equilibrium price and increases the equilibrium quantity of used cars? A) an increase in the wage rate paid to used car salespeople B) a fall in income if used cars are an inferior good C) neither of the above because the question suggests a violation of the "law of demand" D) neither of the above because the question suggests a violation of the "law of supply"
B) a fall in income if used cars are an inferior good
Changes in which of the following shifts the supply curve of hamburgers? A) a rise in the price of soda, a complement for hamburgers B) an increase in the price of meat used to produce hamburgers C) new research that establishes a link between hamburgers and heart problems D) an economy-wide decrease in income because of a long recession
B) an increase in the price of meat used to produce hamburgers
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) changes in real GDP.
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) final goods and services produced in an economy over a period of time.
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) frictional unemployment.
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) frictionally unemployed.
44) The figure illustrates the demand for and supply for jeans. Suppose jeans are a normal good and people's incomes increase. At the initial price of $50 for a pair of jeans, after the increase in income the quantity demanded is ________ than the equilibrium quantity and there is a ________ of jeans. A) less; shortage B) greater; shortage C) less; surplus D) greater; surplus
B) greater; shortage
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) increases; does not change
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) long-term unemployment is the most costly type of unemployment.
49) In the above figure, a change in quantity demanded with unchanged demand is represented by a movement from A) point a to point b. B) point a to point e. C) point a to point c. D) None of the above represent a change in the quantity demanded with an unchanged demand.
B) point a to point e.
25) The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A decrease in the price of sugar used to make soft drinks is shown as a movement from point a to a point such as A) none of the points that are illustrated. B) point b. C) point c. D) point d.
B) point 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) real GDP fluctuates about potential GDP.
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) recession, trough, expansion, peak.
24) Wages for workers producing iPods and similar products will rise next year. Walkman Watch asks you to predict the effect of this change in next year's market for iPods. You predict that the major effect will be that the A) demand curve for an iPod will shift leftward. B) supply curve for an iPod will shift leftward. C) supply curve for an iPod will shift rightward. D) demand curve for an iPod will shift rightward.
B) supply curve for an iPod will shift leftward.
32) Using the data in the above table, at the price of $80 a phone, a A) surplus of 80 thousand cellular telephones occurs. B) surplus of 25 thousand cellular telephones occurs. C) shortage of 55 thousand cellular telephones occurs. D) shortage of 25 thousand cellular telephones occurs.
B) surplus of 25 thousand cellular telephones occurs.
33) In the above figure, if the demand curve is D2, then A) there will be a shortage equal to Q2 - Q1. B) the equilibrium price will be P1 and the equilibrium quantity will be Q2. C) the equilibrium price will be P1 and the equilibrium quantity will be Q1. D) an increase in price will shift the demand curve to D3.
B) the equilibrium price will be P1 and the equilibrium quantity will be Q2.
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) the pattern of short-run upward and downward movements in total output.
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) they are not purchases of goods or services.
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) $128.
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) $2,800
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) $540
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) $90 billion.
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) 4 percent
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) 5.4 percent
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) 75.7 percent
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) 9.1 percent.
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) B and 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) Real GDP overvalues household production.
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) Social Security expenditures
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) U.S. GDP decreases because net exports are negative
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) are not; are not actively seeking work
43) The cost of inflation to society includesI.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) both I and II
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) compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output.
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) cyclical unemployment equals zero.
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) decreasing.
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) frictional unemployment increases.
An increase in the number of fast-food restaurants A) increases the demand for substitutes for fast-food meals. B) increases the demand for fast-food meals. C) increases the supply of fast-food meals. D) raises the price of fast-food meals.
C) increases the supply of fast-food meals.
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) introduction of hybrid automobiles, vehicles that were not made until recently
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) part of GDP in 2015.
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) refer to payments made by the government that are not made to purchase a good or service.
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) the inflation rate was positive and accelerating.
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) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.
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) their inclusion would involve double counting.
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) urban consumers
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) uses the prices of two adjacent years to calculate the real GDP growth rate
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) when growth in real GDP is negative for two consecutive quarters.
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) $100 million
48) Refer to the table above. Suppose that in normal years demand is represented by Case 2 and supply is represented by Case B. In a normal year the price of wapanzo beans will be A) $1 per pound. B) $2 per pound. C) $4 per pound. D) $3 per pound.
D) $3 per pound.
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) -$70 billion.
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) 100
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) 169
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) 225
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) 42 million.
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) 6.8 percent
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) 65 percent
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) 9.0 percent
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) All of the above answers are correct.
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) None of the above because they all increase or do not change the unemployment rate.
A price below the equilibrium price results in A) a further price fall. B) excess supply. C) a surplus. D) a shortage.
D) a shortage.
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) all of the above.
28) The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point d would be the result of A) a decrease in the relative price of a soft drink. B) an increase in the number of soft drink suppliers. C) an increase in technology. D) an increase in the relative price of a soft drink.
D) an increase in the relative price of a soft drink.
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) an increase to the U-3 unemployment rate.
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) are $0.5 million
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) both I and II
8) Gross investment equals net investment plus A) dividends paid to the owners of the company. B) capital gains. C) capital. D) depreciation.
D) depreciation.
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) fluctuates around potential GDP.
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) frictional and structural unemployment
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) gross investment.
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) in 15 years
37) If the price of a video download is below its equilibrium price, the quantity supplied is ________ than the quantity demanded. If download is above its equilibrium price, the quantity supplied is ________ than the quantity demanded. A) less; less B) greater; less C) greater; greater D) less; greater
D) less; greater
If the price of a good changes but everything else influencing suppliers' planned sales remains constant, there is a A) new supply curve that is to the right of the initial supply curve. B) rotation of the initial supply curve around the initial price. C) new supply curve that is to the left of the initial supply curve. D) movement along the supply curve.
D) movement along the supply curve.
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) people in prison
29) In the figure above, which movement could be the result of an increase in the wages paid to oil workers? A) point a to point e B) point a to point b C) point a to point c D) point a to point d
D) point a to point d
If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________. A) surplus; fall B) surplus; rise C) shortage; fall D) shortage; rise
D) shortage; rise
If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 8,000 per year, there is a ________ in the market and the price will ________. A) surplus; rise B) shortage; fall C) shortage; rise D) surplus; fall
D) surplus; fall
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) technological change or foreign competition.
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) the individual lacks marketable job skills because technology has changed.
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) the movement from peak to trough.
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) the part of the economy purposely hidden
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) total amount of gross investment minus depreciation.
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) uses prices for the current year and the previous year to calculate growth in real GDP.
45) The figure illustrates the market for chairs. If the supply of chairs increases, the price of a chair ________ $40 and the quantity ________. A) will fall below; demanded will decrease B) will rise above; supplied will increase C) will rise above; demanded will decrease D) will fall below; demanded will increase
D) will fall below; demanded will increase
