Macro Unit 2
Which of the following will happen when the actual inflation rate exceeds the expected inflation rate?
This will harm lenders with fixed-interest rate loans.
During recessions caused by changes in aggregate demand, the economy typically experiences
rising income and rising employment
Which of the following is classified as a discouraged worker?
Sara has been unable to find a job and abandoned her job search.
Suppose the consumer price index (CPI) was 100 on January 1st, 2017 and 110 on January 1st, 2018 with no changes in nominal wages. Which of the following is definitely true about the economy between January of 2017 and January of 2018?
The inflation rate was 10 percent.
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
In 2007, the nominal gross domestic product (GDP) was $50 billion and the GDP deflator was 200. Thus real GDP was
$25 billion
Which statement is true about the circular flow diagram of an economy?
The market for factors of production connects spending by firms to household income.
Suppose Miguel wants to know the value of real gross domestic product (GDP) for 2011 in terms of the base year 1984 dollars. In 1984 nominal GDPGDP was $10 billion. In 2011 nominal GDP was $15 billion and the price deflator was 200. Real GDP in 1984 dollars would be equal to which of the following?
$7.5 billion ($15 billion/200)×100=$7.5 billion
Which of the following is an example of frictional unemployment?
A college graduate interviewing for two available positions
Which of the following individuals is classified as unemployed?
A recent college graduate who is looking for her first job
Which of the following describes a limitation of gross domestic product (GDP)
It does not account for the distribution of income in a nation or income inequality.
Which of the following is true about the real GDP?
It measures aggregate output using constant prices.
Jan works a 30-hour week for a minimum wage of $10 per hour. Suppose that last year is the base year for the Consumer Price Index (CPI) Which of the following is true about Jan's real wage if at the end of this year the CPI is 125 ?
Jan's real wage is $8 per hour at the end of the year. $10/(125/100)
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 statement is true about the approaches used to measure the value of a nation's gross domestic product (GDP) ?
The expenditures approach to calculating GDP sums consumption spending, investment spending, government spending, and net exports.
Alice, who has left her job in New York, is moving to Atlanta and looking for a job. In terms of employment status, Alice can most accurately be described as
frictionally unemployed
Olivia volunteers full time at an animal shelter and will not accept any offers for a paid job for the next six months. Olivia is
not in the labor force
A country's real gross domestic product is the annual value of all final goods and services that are
produced in that country, adjusted for changes in the price level
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
Which of the following is true about gross domestic product (GDP)?
Calculations of GDP include the unsold inventories of goods produced within the borders of the country.
Which of the following types of unemployment is caused by a recession?
Cyclical
Which of the following would cause the official unemployment rate to understate the problem of unemployment?
Discouraged workers
Which of the following terms describes a slowdown in the rate of increase in the consumer price index?
Disinflation
Which of the following is the correct calculation of Real Gross Domestic Product (GDP)
Real GDP=(Nominal GDP/GDP deflator)×100
As a measure of economic performance, the United States gross domestic product (GDP) accounts for which of the following?
The cleanup of an oil spill
GDP does NOT account for which of the following
The depletion of natural resources
The output gap is measured by which of the following?
The difference between actual and potential GDP.
When an economy is at the trough of the business cycle, which of the following is then true about the state of the economy?
There is a recessionary gap.
Unexpected increases in inventories usually precede
decreases in production
If the nominal gross domestic product (GDP) of the nation of Hypothetica increased in 2007 relative to the previous year, it must be true that in Hypothetica in 2007
both the price level and the real GDP have increased
Which of the following typically occurs during an expansionary phase of a business cycle?
Employment increases.
Last year, Myron purchased a $10,000 certificate of deposit with a fixed 3% interest rate from his bank. The government reported that prices, on average, have fallen by 5% during the current year. Which of the following can be concluded as a result of this transaction?
Myron gains, while the bank loses.
Which of the following describes a difference between nominal gross domestic product (GDP)and real GDP?
Nominal GDP uses current prices to measure the value of final output, while real GDP uses constant prices.
What type of unemployment describes the situation of factory workers displaced by automation?
Structural
Labor unions negotiated a 3-year contract with employers in the automobile industry. They agreed to a 3 percent per year increase in pay over the 3 years. How would each group be affected by an actual inflation rate of 4% next year?
Workers would be worse off, and the employers would be better off.
Ying has just graduated from college and is now interviewing for jobs. Ying would best be described as
frictionally unemployed