Econ Unit 2

If the nominal GDP in a given year is $500 billion and the GDP deflator for that year is 125, how much is the real GDP?

$400 billion

Which of the following is true regarding Gross Domestic Product (GDP)?

GDP, adjusted for inflation, measures economic growth over time

The nominal GDP for the year 2010 is $120 billion and the nominal GDP for the year 2012 is $240 billion. Assuming that the year 2010 is the base year and that the real GDP of the year 2012 is $200, what is the GDP deflator in 2012?

120

If the price of a specific market basket in the year 2008 was $240 and the price of the same market basket in the year 2013 was $300. What is the Consumer Price Index (CPI)of the year 2013 based on base year 2008 prices?

125

Gross Domestic Product is equivalent to the sum of:

Consumer spending, investment spending, government purchases and net exports

Which type of unemployment would most likely increase if workers are laid off due to a large decrease in consumer spending?

Cyclical

Nicole was laid off as a waitress when her restaurant closed down due to the slow economy. Nicole is considered

Cyclically unemployed

Which of the following is true regarding full employment?

Full employment occurs when cyclical unemployment is zero

All of the following are criticisms of how the government measures the economy except

Real GDP overstates economic growth since it doesn't account for changes in price level

If the nominal GDP for a given year is $500 Billion and the real GDP for that year is $400 Billion then which of the following must be true

The GDP deflator is 125

Which of the following is the best example of structural unemployment?

Workers are fired because they do not have the specific skills employers value

If a country's nominal percent change in GDP is positive, which of the following must be true?

the real GDP and/or the price level has increased

Which of the following will most likely decrease a country's Natural Rate of Unemployment (NRU)?

A decrease in unemployment benefits paid by the government

Which of the following individuals is clearly considered unemployed?

A lawyer that sold his firm and is now looking for a job as a teacher

GDP is the dollar value of all final goods produced in a country's border in one year. It does not include intermediate goods, household production, or transfer payments such as welfare or unemployment benefits. It does include government expenditures and imports from foreign countries.

A plane produced in the U.S but sold in Mexico

Which of the following is true regarding the quantity theory of money?

An increase in money supply or the velocity of money will increase nominal output

A economy facing extremely low employment and high GDP growth will most likely experience which of the following?

An increase in price level

A mechanic that leaves his job working on cars and is currently looking for a job working on planes is considered

Frictionally unemployed

As a measure of economic welfare, GDP underestimates a country's production of goods and services when there is an increase in

Household production

Which of the following is most true regarding unanticipated inflation? I. Workers with fixed wage rates are hurt by unanticipated inflation II.Employers that charge fixed wages are hurt by unanticipated inflation III.Lenders with fixed rate loans are helped by unanticipated inflation. IV.Borrowers who have fixed rate loans are helped by unanticipated inflation.

I and IV only

Which of the following will be included in the current year's calculation of GDP?

Income earned as a lifeguard at a summer camp

If an American student purchases a personal computer made by a Korean owned company located in California, what would happen to consumption and the GDP of the USA as a result?

Increase / increase

Which of the following is true regarding inflation?

Inflation decreases the purchasing power of a country's currency

The major difference between real and nominal GDP is that real GDP

Is adjusted for price-level changes using a price index

The natural rate of unemployment

Is the sum of frictional and structural unemployment

If purchases of education and medical care were counted as investment rather than consumption, GDP would:

Not change, because there is no change in total aggregate expenditures

The unemployment rate measures the percentage of

People in the labor force who are actively looking, but do not have jobs

The value of which of the following is counted in the U.S. GDP?

Salary bonuses given to investment bankers

Assume the CPI increases from 100 to 120 between 2014 and 2015. Which of the following must be true?

The average price of a specific market basket increased 20%

3. Which of the following would represent an addition to a nation's GDP?

The government hires workers to install street lights

The official unemployment rate is not always the most accurate indicator of actual unemployment in the economy because

The official rate does not include persons who have given up looking for work

Which of the following is true regarding nominal and real GDP?

The only thing that can increase real GDP is an increase in output

If real GDP is increasing at 5% per year and nominal GDP is increasing at 10% per year, which of the following is necessarily true?

The price level is increasing

If the labor force participation rate increased at the same time that the unemployment rate stayed the same, which of the following must be true?

The total number of jobs in the economy increased

Demand-Pull inflation is most likely to occur when

There is an increase in consumer spending

If the Consumer Price Index changes from 100 to 90, economists will know that:

There was deflation in the economy

When calculating GDP, investment is best defined as

business spending on capital goods

If a worker receives a raise in their nominal wage from $10 to $15 per hour and the inflation rate increases from 2% to 4%, the worker's real wage has approximately

decreased by 50%