ECON 214 quiz 1 solutions complete answers

ECON 214 quiz 1 solutions complete answers 

 

Consider the following data that identifies real GDP in comparison to the long-run trend of real GDP to answer the questions that follow.
 
Between quarter 7 and quarter 8, real GDP grew by what percentage?

 

For the the questions that follow, suppose a country has the following quarterly growth data for the last three years:
 
The country’s long-run average growth rate is 3%. In how many of these quarters did GDP contract?

 

To avoid double-counting when calculating GDP, it is best to:

 

If nominal GDP is increasing, which of the following is true?

 

Consider the following data, where GDP values are measured in millions of dollars, to answer the questions that follow.

 

What was the inflation rate between 2010 and 2011? Round to the nearest decimal.

 

The percent change in the overall level of prices in the economy is called:

 

Which of the following is a service?

 

Nominal GDP increased from $14.0 trillion to $14.7 trillion, and the price level increased from 120 to 126. Which of the following is true?

 

Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the questions that follow: Assume that the base year is 2012.

 

What was the growth rate of real GDP between the two years?

 

Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to GDP is:

 

Economic growth is best measured by changes in:

 

Real GDP can be calculated as:

 

Macroeconomics is the study of:

 

Real GDP is GDP adjusted for changes in:

 

When an unemployed worker receives a payment from the government as a result of being unemployed, it is:

 

When GDP increases, national income ________ and national output __________.

 

Consider the following data to answer the questions that follow.

 

Although countries C and D have the same level of GDP, country C has a level of per capita GDP that is ________ times that of country D.

 

 

1.
According to the March 2012 consumer price index (CPI), the top three consumer expenditure categories are, respectively:
 
 
2.
As a business owner, you find that your resource prices are increasing often. Because these costs are rising, you find it necessary to change your prices frequently. This best describes:
 
 
3.
The average inflation rate in the United States from 2000-2012 was about:
 
 
4.
The BLS uses these three steps to calculate the CPI:

Define the "basket" and use the "appropriate weights" (based on the budget)
Determine the prices in the time periods (usually one month)
Convert to an index number (comparing the past month to the current month)
 
 
5.
The Bureau of Labor Statistics releases consumer price index (CPI) data:
 
 
6.
The business cycle measures:
 
 
8.
Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the questions that follow.
Assuming these are the only two goods produced in the economy, what is the value of the GDP?
 
 
9.
Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the questions that follow.
The market value of cell phones is:
 
 
10.
Consider the following figure to answer the questions that follow.
During which period was the economy in a contraction?
 
 
11.
The consumption category of GDP includes all purchases of final goods and services by households except:
 
 
12.
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
 
 
13.
Deflation is best described as:
 
 
14.
Does the value of cleaning your house count toward the value of GDP?
 
 
15.
During normal economic times, unemployment in France and Germany tends to be ____________ than in the United States mainly because of ____________.
 
 
16.
During periods of recession:
 
 
17.
Economists refer to full-employment output as:
 
 
18.
Extra Credit: Your entertainment price index (EPI) was computed based on three goods: movie tickets, popcorn, and limeade. If you change the quantity of these goods from this year to next year and the prices of two of the three goods increase while the other price falls, then:
 
 
19.
Farmer Bill grows wheat and sells it to the miller for $50,000. The miller turns it into flour and sells it to the bakery for $75,000. The bakery uses the flour in the bread that it sells to people for $90,000. The total contribution to GDP is:
 
 
20.
Ford produces 100,000 cars this year and only sells 95,000. The 5,000 cars that are not sold _______ listed in ________ category of GDP.
 
 
21.
The four major expenditure categories of GDP are:
 
 
22.
Frictional unemployment is:
 
 
 
 
 
 
 
 
 
 
 
 

23.
Goods that firms repackage with other goods for sale at a later stage are:
 
 
24.
If the consumer price index (CPI) was 100 in the period of 1982-1984, then:
 
 
25.
If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos is:
 
 
26.
If the price of a typical market basket of goods increased from about $20 in 1960 to $200 in early 2012, then it:
 
 
27.
If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%, then:
 
 
28.
If your real wage rose but your nominal wage fell, this would imply that:
 
 
29.
In Nation A, the price index rises from 110 to 120 in a particular year. In the same year, the price level rises from 120 to 130 in Nation B. This means:
 
 
30.
In November of 2009, the United States was in a deep recession. To help keep the economy afloat, the government extended the period of time one could receive unemployment insurance to 99 weeks. This policy had an unintended consequence because:
 
 
31.
It has been shown that increases in the money supply are directly related to the rate of inflation. If the previous statement is true, then:
 
 
32.
Katherine was laid off from her job 11 months ago. After searching for a job for months, Katherine gives up her job search because she feels there are no jobs available for her. Economists would classify Katherine as:
 
 
33.
A member of the labor force is defined as:
 
 
34.
Milton Friedman, who won the Nobel Prize in Economics, characterized inflation as being "high and variable." These characteristics of inflation create problems because:
 
 
35.
Net exports can be defined as:
 
 
36.
Official unemployment is identified as when:
 
 
37.
One improvement of the chained consumer price index (CPI) over the traditional CPI is that:
 
 
38.
The percentage change in any economic variable, including the consumer price index (CPI), is measured by which equation?
 
 
39.
Real GDP can be calculated as
 
 
41.
The root cause of cyclical unemployment is:
 
 
42.
"Rule of 70" permits quick calculation of the time it takes the price level to double:
 
 
 
 
 
 
 
 
 

43.
The state of Florida spends $3 million to repave highways. This is included in the ______ category of GDP.
 
 
44.
Structural, frictional, and cyclical are all types of:
 
 
45.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket's cost was $76.00; in 2004, the basket's cost was $79.50; and in 2006, the basket's cost was $85.00. The value of the CPI was:
 
 
46.
Suppose you want need an inflation number, use the price index just calculated to arrive at the inflation rate (usually expressed in percentages). To measure inflation, subtract last year's price index from this year's price index and divide by last year's index; then multiply by 100 to express as a percentage, Equation 8.2.
 
 
47.
Three accuracy problems with the consumer price index (CPI) are:
 
 
48.
To evaluate the change in average living standards over time, it is best to use:
 
 
49.
Use the following table to answer the questions that follow:

According to the table, the employment rate in this economy is equal to:
 
 
50.
Use the following table to answer the questions that follow:

According to the table, the labor force is:
 
 
51.
What is the consumer price index (CPI)?
 
 
52.
When actual unemployment is less than its natural rate:
 
 
53.
When George buys a new computer for his business, it is included in GDP as _______, and when he buys a new computer for use at home, it counts as ________.
 
 
54.
When people in the United States buy clothing made in China, this counts as:
 
 
55.
When the unemployment rate is equal to its natural rate—that is, no cyclical unemployment exists—the output level produced in the economy is:
 
 
 
 
 
 
 
 
 

57.
Which of the following is a topic of macroeconomics?
 
 
58.
Which statement best represents the purpose for measuring annual inflation (or deflation)?
 
 
59.
Workers who lose their job because of market innovations are considered:
 
 
60.
You bought stock in 2010 for $100 and you sold it in 2012 for $200. You used a broker to sell the stock for you, and he charged you $20. This transaction contributed ________ to GDP.
 
 
61.
Your nominal wage increases by 10%, and the overall price level increases by 12%. Which statement is correct?
 
 
 

 

1.
All three types of unemployment:
 
 
2.
Anything that lengthens the job search process _________ unemployment.
 
 
3.
Based on the belief that prices are very flexible, classical economists conclude that:
 
 
4.
The best measure of the average living standards of people in the country is the:
 
 
5.
Between 1960 and 2014, the average unemployment rate in the United States was about:
 
 
6.
Between 1980 and 2010, steel industry employment in the United States has:
 
 
7.
Between two given years, if real GDP and non-adjusted GDP grow at the same rate, then:
 
 
8.
Brian Murphy is a political consultant for a candidate in Massachusetts. Mr. Murphy's candidate is defeated in the November election, and as a result, Mr. Murphy finds himself unemployed. Mr. Murphy's unemployment is classified as ___________ unemployment.
 
 
10.
Consider the following data to answer the five questions that follow.If these are the only five countries in the world, then country B produces _______ of world GDP.
 
 
11.
Consider the following data to answer the five questions that follow. If these are the only five countries in the world, then country B produces _______ of world GDP.
 
 
12.
Consider the following data to answer the five questions that follow.Which country has the lowest average living standard?
 
 
13.
Consider the following data to answer the five questions that follow.Which two countries have the same average living standard?
 
 
14.
Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the three questions that follow.Assuming these are the only two goods produced in the economy, what is the value of the GDP?
 
 
15.
Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the three questions that follow.The market value of pizza is:
 
 
16.
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
 
 
17.
Cyclical unemployment is:
 
 
18.
The difference between non-adjusted GDP and real GDP is:
 
 
19.
During a recession, fewer individuals fly across the country for vacations. As a result, many pilots and flight attendants lose their jobs. The pilots and flight attendants would be classified as:
 
 
20.
During economic downturns:
 
 
21.
During healthy economic periods, cyclical unemployment:
 
 
22.
During healthy economic periods, only _________ unemployment exist(s).
 
 
23.
During normal economic times, unemployment in Italy tends to be ____________ than in the United States mainly because of ____________.
 
 
24.
An economic downturn can lead to mainly which type of unemployment?
 
 
26.
Even in years when unemployment is high and millions of Americans are looking for work, thousands of jobs every year go unfilled by Americans in the farm industry. Which is the best explanation for this phenomenon?
 
 
27.
Frictional unemployment is:
 
 
28.
Frictional unemployment is present in an economy because:
 
 
29.
GDP increases if prices decrease by ________ and quantities produced increase by ________.
 
 
30.
GDP is a good, but not the best, measure of:
 
 
31.
GDP is best defined as the total market value of all ___________ produced within a country within a given time.
 
 
32.
The government can assist in reducing the level of structural unemployment by:
 
 
33.
The government has decided to give governmental grants to community colleges that offer job training for individuals who have recently been laid off due to their outmoded skills. The government is trying to reduce the level of:
 
 
34.
Government policies such as unemployment compensation and government regulations related to hiring and firing employees result in _________ unemployment.
 
 
35.
The Great Depression lasted most of which decade?
 
 
36.
If asked about the basic functioning of the economy, a classical economist would claim that:
 
 
37.
If asked about the basic functioning of the economy, a Keynesian economist would state that:
 
 
38.
If non-adjusted GDP is declining, then it must be the case that:
 
 
39.
If non-adjusted GDP is increasing, which of the following is true?
 
 
40.
In a given year, if real GDP equals non-adjusted GDP, then:
 
 
 
 
 
 
 
 
 
 
 

41.
The increase in the overall level of prices in the economy is called:
 
 
42.
Inflation necessarily occurs when:
 
 
43.
Inflation occurs when:
 
 
44.
In macroeconomics:
 
 
45.
In regard to describing how the economy functions, Keynesian economists claim that:
 
 
46.
The Internet has enabled workers and companies to find each other more quickly and to make better matches with substantially lower costs. The result is ___________ unemployment.
 
 
47.
It has been shown that increases in the money supply are directly related to the rate of inflation. If the previous statement is true, then:
 
 
48.
Jamal works in a factory in Lake Zurich, Illinois, assembling toy trains. The factory owner updates the current equipment and installs new robots that can do Jamal's job. As a result, Jamal is laid off and is now unemployed. Jamal would be considered:
 
 
49.
JTKB is an accounting firm in South Orange County, Florida. Company policy is that whenever JTKB decides to open up a new accounting position, the hiring manager must conduct at least five interviews over a two-week span. Because of this process, JTKB is increasing ____________ in South Orange County, Florida.
 
 
50.
Keynesian economics include all of the following EXCEPT:
 
 
51.
Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because:
 
 
53.
The main statistic that is used to monitor unemployment in the economy is:
 
 
54.
Natural unemployment is the:
 
 
55.
Nina has a part-time job as she finishes her degree in fashion design. After obtaining her degree she decides to quit her part-time job to search for a job that better fits her now-improved skill set. Nina has a few interviews, but it is taking time to find the job that suits her best. Nina would be considered:
 
 
56.
Official unemployment is identified as when a worker:
 
 
57.
One argument against unemployment insurance is that it:
 
 
58.
Precepts of the classical school of economics include all of the following EXCEPT:
 
 
59.
A primary cause of inflation is:
 
 
61.
The recession of 2007-2009 has been dubbed the:
 
 
62.
A school of thought is a:
 
 
63.
A shortcoming of non-adjusted GDP is that:
 
 
64.
Some individuals are unemployed because it takes time for them to find jobs that fit their skill sets. These individuals would be considered to be:
 
 
 
 
 
 
 
 
 

65.
Some individuals are unemployed because they are laid off from their jobs when the economy is sluggish. These individuals would be considered:
 
 
66.
Some jobs in the economy are no longer needed after an advancement in technology. A person who loses his or her job this way would be considered:
 
 
67.
Some people complain that immigrants are taking farm jobs away from American workers. Which is the best explanation for this claim?
 
 
68.
Structural, frictional, and cyclical are all types of:
 
 
69.
To determine living standards for the average person, we calculate:
 
 
70.
To evaluate the change in average living standards over time, it is best to use:
 
 
71.
Unemployment caused by delays in matching available jobs and workers is called _________ unemployment.
 
 
72.
An unemployment rate that is above the natural rate indicates ________ unemployment, and we say that the economy is producing ________ the full employment output level.
 
 
74.
When it is difficult to hire employees, firms take ____________ to hire, which increases ____________ unemployment.
 
 
75.
Which of the following is an example of frictional unemployment?
 
 
76.
Which of the following is an example of structural unemployment?
 
 
77.
Which of the following is a topic of macroeconomics?
 
 
78.
Which of the following is a topic of microeconomics?
 
 
79.
Which of the following lists the three types of unemployment?
 
 
80.
Which of the following people would be officially considered unemployed?
 
 
81.
Which of the following policy statements would a classical economist tend to support?
 
 
82.
Which of the following policy statements would a Keynesian economist tend to support?
 
 
83.
Which of the following questions does the official unemployment rate answer?
 
 
84.
Which of the following statements about historical unemployment rate is true?
 
 
85.
Which of the following statements about structural unemployment is true?
 
 
86.
Which of the following two types of unemployment occur even when the economy is healthy and growing?
 
 
87.
Workers who lose their jobs because of market innovations are considered:
 
 
88.
Workers who lose their jobs because the skill sets they possess are no longer required in the economy are considered to be:
 
 
 
 
 
 
 
 
 

 

1.
The best measure of the average living standards of people in the country is:
 
 
2.
Bob sells his car to Stan's Used Car Lot for $5,000. Stan's Used Car Lot sells the car to Bill for $5,500. This transaction contributes ________ to GDP.
 
 
3.
Bob wins the lottery. This ________ included in ________ category of GDP.
 
 
4.
The business cycle measures:
 
 
5.
A company produces a computer. They pay $100 for the keyboard and outer case, $200 for the internal hardware, and $100 for the software. They sell it to a consumer for $500. The contribution to GDP is:
 
 
6.
A company sells 100 boxes of chocolate, yet it only produced 90 boxes of chocolate during the year. Which of the following is true?
 
 
8.
A computer company builds a new factory. This is included in the ________ category of GDP.
 
 
9.
The consumption category includes:
 
 
10.
The consumption category of GDP includes all purchases of final goods and services by households except:
 
 
11.
Consumption is approximately ________ of GDP.
 
 
12.
The contraction phase of a business cycle is best described as:
 
 
13.
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
 
 
14.
A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:
 
 
15.
Does the value of cleaning your house count toward the value of GDP?
 
 
16.
An example of an intermediate good would be:
 
 
17.
Farmer Bill grows wheat and sells it to the miller for $50,000. The miller turns it into flour and sells it to the bakery for $75,000. The bakery uses the flour in the bread that it sells to people for $90,000. The total contribution to GDP is:
 
 
18.
Ford produces 100,000 cars this year and only sells 95,000. The 5,000 cars that are not sold _______ listed in ________ category of GDP.
 
 
19.
The four major expenditure categories of GDP are:
 
 
20.
GDP is an important indicator because it is used as a measure of all of the following except:
 
 
21.
GDP is best defined as the total market value of all:
 
 
22.
GDP is most often measured by:
 
 
23.
GDP is not a good measure of:
 
 
24.
Goods that firms repackage with other goods for sale at a later stage are:
 
 
25.
Hollister Co. stocks up on T-shirts for the holiday season. This inventory is included in the _______ category of GDP.
 
 
26.
If nominal GDP is declining, then it must be the case that:
 
 
27.
In 2010, which three countries had the largest GDP? Select all that apply.
 
 
28.
In macroeconomics:
 
 
29.
The investment spending category of GDP does NOT include:
 
 
30.
Joe has a full-time construction job and also does odd jobs for people on the weekends. You have purchased the materials needed to construct a fence at your house and you pay Joe $500 to build the fence. Does the payment to Joe count toward the value of GDP?
 
 
31.
Joe owns a crab shack. When he produces and sells ________ meals in a given day, his income earned will ________.
 
 
32.
Joe sells the house he has lived in for 10 years to the Smith family for $300,000. He receives $50,000 more than his original purchase price 10 years ago. Joe pays his real estate agent a 5% sales commission. This transaction will increase GDP by:
 
 
34.
Many goods and services are illegally sold or legally sold but not reported to the government. If we increased efforts to count those goods and services, GDP would _____________.
 
 
35.
Net exports can be defined as:
 
 
36.
Nominal GDP increases if:
 
 
37.
Nominal GDP is equal to:
 
 
38.
Nominal GDP is GDP measured in:
 
 
39.
The phase of the business cycle where the economy is growing faster than usual is called:
 
 
40.
The phase of the business cycle where the economy is growing slower than usual is called:
 
 
 
 
 
 
 
 
 
 
 

41.
Residents of several European countries spend less time working and more time on leisure activities than do people in the U.S. How is this great leisure time accounted for in Gross Domestic Product measurements?
 
 
42.
A shortcoming of nominal GDP is that:
 
 
43.
The short-run fluctuations in economic activity that can cause output to be above or below the long-run trend are called:
 
 
44.
Since 1967, exported services have _______ and imported goods have ________.
 
 
45.
Since 1967, the citizens of the United States have had _________ in their standard of living?
 
 
46.
Since 1967, the U.S. economy has experienced how many economic contractions?
 
 
47.
The state of Florida spends $3 million to repave highways. This is included in the ______ category of GDP.
 
 
48.
Suppose that Country A has consumption, investment, government spending, imports, and exports as in the table. Calculate country A's GDP.
 
 
50.
To determine a value for GDP, you would:
 
 
51.
What are some uses of GDP data?
 
 
52.
What phrase describes the situation that's occurring when the economy is growing more slowly than usual—or perhaps even shrinking?
 
 
55.
When George buys a new computer for his business, it is included in GDP as _______, and when he buys a new computer for use at home, it counts as ________.
 
 
56.
When John buys new tires for his car it _______, and when Ford buys tires to put on new cars it ____________.
 
 
57.
When you buy a new car built by Ford, it is included in the ________ category of GDP.
 
 
58.
Which components of GDP were the largest in 1967 and 2011?
 
 
59.
Which is the largest component of U.S. GDP?
 
 
60.
Which of the following are components of Gross Domestic Product?
 
 
61.
Which of the following are NOT counted toward GDP?
 
 
62.
Which of the following best describes the relationship between imports and exports? Import spending is _____________ GDP and export spending is _______________ GDP.
 
 
64.
Which of the following is a topic of macroeconomics?
 
 
65.
Which of the following is a topic of microeconomics?
 
 
66.
Which of the following is true of gross domestic product?
 
 
67.
Which of the following would be included in the U.S. GDP?
 
 
68.
Which of the following would be included in the U.S. GDP?
a. the sale of services (for example a hair cut) by an American citizen who is living in France
b. the sale of a used Chevy convertible
c. cocaine that is sold (illegally) by a drug gang
 
 
69.
Which of the following would be studied by a macroeconomist?
 
 
 
 
 
 
 
 
 

70.
Which of the following would be studied by a macroeconomist?
a country's gross domestic product
b. a country's inflation rate
c. why exchange rates fluctuate
 
 
71.
Which of the following would not be counted in the calculation of GDP? Select all that apply.
 
 
72.
Which of these statements about GDP is/are true?
 
 
 

 

1.
An accurate measure of GDP is derived by adding:
 
 
2.
Assuming the price level increased, if real GDP is greater than nominal GDP for a given year, then:
 
 
3.
Assuming the price level increased, if real GDP is less than nominal GDP for a given year, then
 
 
4.
Assuming the price level increased, if real GDP is less than nominal GDP for a given year, then:
 
 
5.
Assuming the price level increased, real GDP is greater than nominal GDP if the current year is ________ the base year, and real GDP is less than nominal GDP if the current year is ________ the base year.
 
 
6.
Assuming the price level increased, real GDP is greater than nominal GDP if the current year is ________ the base year, and real GDP is less than nominal GDP if the current year is ________ the base year
 
 
7.
Between two given years, if real GDP and nominal GDP grow at the same rate, then:
 
 
8.
Bob sells his car to Stan's Used Car Lot for $5,000. Stan's Used Car Lot sells the car to Bill for $5,500. This transaction contributes ________ to GDP
 
 
9.
Bob wins the lottery. This ________ included in ________ category of GDP.
 
 
10.
A company sells 100 boxes of chocolate, yet it only produced 90 boxes of chocolate during the year. Which of the following is true?
 
 
11.
A company sells 100 boxes of chocolate, yet it only produced 90 boxes of chocolate during the year. Which of the following is true Inventory
 
 
12.
Company X sells paper to company Y for $100,000. Company Y uses the paper to make textbooks, selling them to consumers for $500,000. The total contribution to GDP is:
 
 
14.
Company X sells sugar to company Y for $50,000. Company Y uses the sugar to make chocolate bars, selling them to consumers for $150,000. The total contribution to GDP is
 
 
15.
A computer company builds a new factory. This is included in the ________ category of GDP
 
 
16.
The consumption category includes:
 
 
17.
Consumption is approximately ________ of GDP
 
 
18.
The contraction phase of a business cycle is best described as
 
 
19.
The contraction phase of a business cycle is best described as:
 
 
20.
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true
 
 
21.
A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services. Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides. The total contribution to GDP this month is:
 
 
22.
Does the value of cleaning your house count toward the value of GDP?
 
 
24.
An example of an intermediate good would be:
 
 
25.
The expansion phase of a business cycle is best described as:
 
 
26.
Farmer Bill grows wheat and sells it to the miller for $50,000. The miller turns it into flour and sells it to the bakery for $75,000. The bakery uses the flour in the bread that it sells to people for $90,000. The total contribution to GDP is:
 
 
27.
Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The impact of these transactions on GDP is:
 
 
28.
The four major expenditure categories of GDP are
 
 
29.
The GDP deflator is a measure of:
 
 
30.
GDP increases if prices decrease by ________ and quantities produced increase by ________.
 
 
31.
GDP is an important indicator because it is used as a measure of all of the following except:
 
 
32.
GDP is an important indicator because it is used as a measure of all of the following except
 
 
33.
GDP is best defined as the total market value of all:
 
 
34.
GDP is most often measured by:
 
 
35.
GDP is not a good measure of:
 
 
36.
The government purchases category of GDP includes spending by
 
 
37.
Government salaries paid to soldiers in the military are included in the ________ category of GDP.
 
 
38.
Government salaries paid to soldiers in the military are included in the ________ category of GDP
 
 
39.
Hollister Co. stocks up on T-shirts for the holiday season. This inventory is included in the _______ category of GDP.
 
 
 
 
 
 
 
 
 
 
 

40.
How much (in dollars) did the government spend on education in 2011?
 
 
41.
How much (in dollars) did the government spend on education in 2011
 
 
42.
If nominal GDP is declining, then it must be the case that:
 
 
44.
If real GDP grew by 2% and the inflation rate was 2%, then nominal GDP grew by:
 
 
45.
If real GDP grew by 4% and nominal GDP grew by 3%, then the inflation rate was
 
 
46.
If real GDP grew by 4% and nominal GDP grew by 3%, then the inflation rate was:
 
 
47.
If you wanted to compare economic well-being over time and across countries, the data you would use is:
 
 
48.
In 2010, which three countries had the largest GDP? Select all that apply.
 
 
49.
An index of the average prices of all goods and services throughout the economy is called:
 
 
50.
In macroeconomics:
 
 
51.
The investment spending category of GDP does NOT include:
 
 
52.
Joe owns a crab shack. When he produces and sells ________ meals in a given day, his income earned will ________.
 
 
53.
Joe sells the house he has lived in for 10 years to the Smith family for $300,000. He receives $50,000 more than his original purchase price 10 years ago. Joe pays his real estate agent a 5% sales commission. This transaction will increase GDP by
 
 
54.
The long run average growth rate of real GDP in the U.S. economy is about:
 
 
55.
The major components of a country's economy are consumption (C), investment (I), government spending (G), exports, and imports. Which of the following is the correct equation for determining GDP
 
 
56.
The major components of a country's economy are consumption (C), investment (I), government spending (G), exports, and imports. Which of the following is the correct equation for determining GDP?
 
 
57.
Many goods and services are illegally sold or legally sold but not reported to the government. If we increased efforts to count those goods and services, GDP would _____________
 
 
58.
Nominal GDP increased from $15.44 trillion to $15.75 trillion, and the price level increased from 116.5 to 122.3. Which of the following is true
 
 
59.
Nominal GDP increased from $15.44 trillion to $15.75 trillion, and the price level increased from 116.5 to 122.3. Which of the following is true?
 
 
60.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The growth rate of real GDP was approximately: (Round to the nearest second decimal.)
 
 
61.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The growth rate of real GDP was approximately: (Round to the nearest second decimal
 
 
62.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The rate of inflation was: (Round to the nearest first decimal.)
 
 
63.
Nominal GDP increased from $15.76 trillion to $16.39 trillion, and the price level increased from 112.6 to 114.8. Which of the following is true?
 
 
64.
Nominal GDP increases if:
 
 
65.
Nominal GDP is equal to
 
 
 
 
 
 
 
 
 

66.
Nominal GDP is equal to:
 
 
69.
The phase of the business cycle where the economy is growing faster than usual is called:
 
 
70.
The price level was 110 in 2009 and 115 in 2011. Nominal GDP in 2009 was $13,974 billion. Which of the following is NOT correct?
 
 
72.
Real GDP increases if:
 
 
74.
Real GDP is GDP measured in
 
 
75.
Real GDP is GDP measured in:
 
 
76.
Real GDP would be a better measure of economic well-being if it included the value of
 
 
77.
Residents of several European countries spend less time working and more time on leisure activities than do people in the U.S. How is this great leisure time accounted for in Gross Domestic Product measurements?
 
 
78.
The sale of American-grown corn to China is included in the ________ category of GDP
 
 
79.
The sale of American-grown corn to China is included in the ________ category of GDP.
 
 
80.
A shortcoming of nominal GDP is that:
 
 
81.
A shortcoming of real GDP is
 
 
82.
A shortcoming of real GDP is:
 
 
83.
A shortcoming of using real GDP as a measure of economic well-being is that it does not measure changes
 
 
84.
A shortcoming of using real GDP as a measure of economic well-being is that it does not measure changes in:
 
 
85.
The short-run fluctuations in economic activity that can cause output to be above or below the long-run trend are called:
 
 
86.
Since 1967, exported services have _______ and imported goods have ________
 
 
87.
Since 1967, exported services have _______ and imported goods have ________ i
 
 
88.
Since 1967, the citizens of the United States have had _________ in their standard of living
 
 
89.
Since 1967, the U.S. economy has experienced how many economic contractions?
 
 
90.
The state of Florida spends $3 million to repave highways. This is included in the ______ category of GDP
 
 
91.
Suppose that Country A has consumption, investment, government spending, imports, and exports as in the table. Calculate country A's GDP
 
 
92.
Suppose the country Inflatistan had a nominal GDP of $48 billion in 2007 and a nominal GDP of $114 billion in 2013. If the price level was 100 in 2007 and 190 in 2013, what was the real GDP in 2013 (using 2007 dollars)?
 
 
93.
The table below shows nominal GDP and the price level in the two years 2005 and 2011.
(Year- 2005, Nominal GDP- 12,623, Price Level- 100)
(Year- 2011, Nominal GDP- 15,076, Price Level- 113)
GDP in 2011, measured in 2005 dollars was
 
 
94.
To determine a value for GDP, you would
 
 
 
 
 
 
 
 
 

95.
To determine a value for GDP, you would
 
 
96.
To determine living standards for the average person, we calculate:
 
 
97.
To evaluate the change in average living standards over time, it is best to use
 
 
98.
To evaluate the change in average living standards over time, it is best to use:
 
 
99.
What are some uses of GDP data?
 
 
100.
What phrase describes the situation that's occurring when the economy is growing more slowly than usual—or perhaps even shrinking?
 
 
101.
What was real GDP in 2011 if the price level was 100?
 
 
102.
What was real GDP in 2011 if the price level was 100
 
 
103.
What was the growth rate in real GDP from 1967 to 2011?
 
 
104.
What was the growth rate of real GDP in 2011, if the price level was 113 and and nominal GDP was $14,499 billion in 2010; and the price level was 115 in 2011?
 
 
105.
When GDP increases, national income ________ and national output __________
 
 
106.
When GDP increases, national income ________ and national output __________
 
 
107.
When George buys a new computer for his business, it is included in GDP as _______, and when he buys a new computer for use at home, it counts as ________.
 
 
108.
When John buys new tires for his car it _______, and when Ford buys tires to put on new cars it ____________.
 
 
109.
When people in the United States buy clothing made in China, this counts as
 
 
110.
When you buy a new car built by Ford, it is included in the ________ category of GDP.
 
 
111.
Which components of GDP were the largest in 1967 and 2011
 
 
112.
Which of the following are components of Gross Domestic Product?
 
 
113.
Which of the following best describes the relationship between imports and exports? Import spending is _____________ GDP and export spending is _______________ GDP.
 
 
115.
Which of the following is a topic of macroeconomics?
 
 
116.
Which of the following is a topic of microeconomics?
 
 
117.
Which of the following is included in the government purchases category of GDP?
 
 
118.
Which of the following is true of gross domestic product?
 
 
119.
Which of the following represents the largest share of U.S. GDP?
 
 
120.
Which of the following transactions, if they were included in the calculation of GDP, would lead to an overstated GDP figure? Select all that apply
 
 
121.
Which of the following would be included in the U.S. GDP
 
 
 
 
 
 
 
 
 

122.
Which of the following would be included in the U.S. GDP?
 
 
123.
Which of the following would be included in the U.S. GDP?
 
 
124.
Which of the following would be included in the U.S. GDP?
 
 
125.
Which of the following would be studied by a macroeconomist
 
 
126.
Which of the following would be studied by a macroeconomist?
 
 
127.
Which of the following would not be counted in the calculation of GDP? Select all that apply.
 
 
128.
Which of these statements about GDP is/are true
 
 
129.
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in GDP
 
 
130.
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $50. This adds _____ to GDP when the store sells the game to the consumer.
 
 
131.
You bought stock in 2010 for $100 and you sold it in 2012 for $200. You used a broker to sell the stock for you, and he charged you $20. This transaction contributed ________ to GDP
 
 
132.
You work for the Committee for Economic Evaluation in the small nation of Kinsdale. Your current job is to determine the country's gross domestic product in the past year. Being a very small country, the people only produce three things, which are listed in the table below
 
 
 
 
 
 
 
 
 

 

1.
An accurate measure of GDP is derived by adding:
 
 
2.
Assuming the price level increased, if real GDP is greater than nominal GDP for a given year, then:
 
 
3.
Assuming the price level increased, if real GDP is less than nominal GDP for a given year, then:
 
 
4.
Assuming the price level increased, real GDP is greater than nominal GDP if the current year is ________ the base year, and real GDP is less than nominal GDP if the current year is ________ the base year.
 
 
5.
Between two given years, if real GDP and nominal GDP grow at the same rate, then:
 
 
6.
Bob sells his car to Stan's Used Car Lot for $5,000. Stan's Used Car Lot sells the car to Bill for $5,500. This transaction contributes ________ to GDP.
 
 
7.
A company sells 100 boxes of chocolate, yet it only produced 90 boxes of chocolate during the year. Which of the following is true?
 
 
8.
Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total contribution to GDP is:
 
 
9.
Consumption is approximately ________ of GDP.
 
 
10.
Country A has a GDP of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
 
 
11.
The difference between nominal GDP and real GDP is:
 
 
12.
Does the value of cleaning your house count toward the value of GDP?
 
 
13.
An example of an intermediate good would be:
 
 
14.
The expansion phase of a business cycle is best described as:
 
 
15.
Farmer John produces oranges. He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000. Tropicali uses the oranges to make orange juice, which it sells to consumers for $25,000. The impact of these transactions on GDP is:
 
 
16.
Ford produces 100,000 cars this year and only sells 95,000. The 5,000 cars that are not sold _______ listed in ________ category of GDP.
 
 
17.
The GDP deflator is a measure of the price level that includes prices of:
 
 
18.
GDP increases if prices decrease by ________ and quantities produced increase by ________.
 
 
19.
GDP is a good, but not the best, measure of:
 
 
20.
The government purchases category of GDP includes spending by:
 
 
21.
Government salaries paid to soldiers in the military are included in the ________ category of GDP.
 
 
22.
How much (in dollars) did the government spend on education in 2011?
 
 
23.
If nominal GDP changed by 6% and the price level changed by 2%, then real GDP changed by:
 
 
24.
If nominal GDP is declining, then it must be the case that:
 
 
26.
If real GDP equals nominal GDP, then:
 
 
27.
If real GDP grew by 4% and nominal GDP grew by 3%, then the inflation rate was:
 
 
28.
If you wanted to compare economic well-being over time and across countries, the data you would use is:
 
 
29.
An index of the average prices of all goods and services throughout the economy is called:
 
 
30.
The investment spending category of GDP does NOT include:
 
 
31.
Joe has a full-time construction job and also does odd jobs for people on the weekends. You have purchased the materials needed to construct a fence at your house and you pay Joe $500 to build the fence. Does the payment to Joe count toward the value of GDP?
 
 
32.
Joe owns a crab shack. When he produces and sells ________ meals in a given day, his income earned will ________.
 
 
33.
The long run average growth rate of real GDP in the U.S. economy is about:
 
 
34.
The major components of a country's economy are consumption (C), investment (I), government spending (G), exports, and imports. Which of the following is the correct equation for determining GDP?
 
 
35.
Many goods and services are illegally sold or legally sold but not reported to the government. If we increased efforts to count those goods and services, GDP would _____________.
 
 
37.
Nominal GDP increased from $15.44 trillion to $15.75 trillion, and the price level increased from 116.5 to 122.3. Which of the following is true?
 
 
38.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The growth rate of real GDP was approximately: (Round to the nearest second decimal.)
 
 
39.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120.0 to 122.4. The rate of inflation was: (Round to the nearest first decimal.)
 
 
40.
Nominal GDP increased from $15.76 trillion to $16.39 trillion, and the price level increased from 112.6 to 114.8. Which of the following is true?
 
 
41.
Nominal GDP is GDP measured in:
 
 
 
 
 
 
 
 
 
 
 

43.
The phase of the business cycle where the economy is growing faster than usual is called:
 
 
45.
Real GDP increases if:
 
 
48.
Real GDP would be a better measure of economic well-being if it included the value of:
 
 
49.
The sale of American-grown corn to China is included in the ________ category of GDP.
 
 
50.
A shortcoming of nominal GDP is that:
 
 
51.
A shortcoming of real GDP is:
 
 
52.
A shortcoming of using real GDP as a measure of economic well-being is that it does not measure changes in:
 
 
53.
Since 1967, the U.S. economy has experienced how many economic contractions?
 
 
54.
The state of Florida spends $3 million to repave highways. This is included in the ______ category of GDP.
 
 
55.
Suppose that Country A has consumption, investment, government spending, imports, and exports as in the table. Calculate country A's GDP.
 
 
56.
Suppose that Country B has consumption, investment, government spending, imports, and exports as follows.
 
 
57.
Suppose the country Inflatistan had a nominal GDP of $48 billion in 2007 and a nominal GDP of $114 billion in 2013. If the price level was 100 in 2007 and 190 in 2013, what was the real GDP in 2013 (using 2007 dollars)?
 
 
58.
The table below shows nominal GDP and the price level in the two years 2005 and 2011.
 
 
59.
To determine a value for GDP, you would:
 
 
60.
To determine living standards for the average person, we calculate:
 
 
61.
To evaluate the change in average living standards over time, it is best to use:
 
 
62.
What are some uses of GDP data?
 
 
63.
What was nominal GDP in 1967 if the price level was 21.13? Hint: use the RGDP formula in reverse)
 
 
64.
What was real GDP in 2011 if the price level was 100?
 
 
65.
What was the growth rate in real GDP from 1967 to 2011?
 
 
66.
What was the growth rate of real GDP in 2011, if the price level was 113 and and nominal GDP was $14,499 billion in 2010; and the price level was 115 in 2011?
 
 
67.
When John buys new tires for his car it _______, and when Ford buys tires to put on new cars it ____________.
 
 
68.
When people in the United States buy clothing made in China, this counts as:
 
 
69.
Which is the largest component of U.S. GDP?
 
 
70.
Which of the following are NOT counted toward GDP?
a. housework you do around your home
b. products sold illegally on a black market
c. quality of the environment
d. all of these
 
 
71.
Which of the following is included in the government purchases category of GDP?
 
 
72.
Which of the following represents the largest share of U.S. GDP?
 
 
 
 
 
 
 
 
 

73.
Which of the following scenarios are macroeconomic in nature? Select all that apply.
 
 
74.
Which of the following transactions, if they were included in the calculation of GDP, would lead to an overstated GDP figure? Select all that apply.
 
 
75.
Which of the following would be included in the U.S. GDP?
 
 
76.
Which of the following would be included in the U.S. GDP?
a. commissions paid to E*TRADE because they facilitated a stock trade
b. money earned by Las Vegas casinos for providing services to gamblers
c. money that's paid to a local pharmacy for a flu shot
d. all of these
e. none of these
 
 
77.
Which of the following would be studied by a macroeconomist?
 
 
78.
Which of the following would be studied by a macroeconomist?
a. a country's gross domestic product
b. a country's inflation rate
c. why exchange rates fluctuate
d. all of these
 
 
79.
Which of these statements about GDP is/are true?
 
 
80.
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $50. This adds _____ to GDP when the store sells the game to the consumer.
 
 
81.
You work for the Committee for Economic Evaluation in the small nation of Kinsdale. Your current job is to determine the country's gross domestic product in the past year. Being a very small country, the people only produce three things, which are listed in the table below.
 
 
 
 
 
 
 
 
 

 

1.
According to the Fisher equation, if a bank extends a loan for 3% and the inflation rate ends up being 2%:
a. the real interest rate is -1%.
b. the nominal interest rate is 5%.
c. the nominal interest rate is 1%.
d. the real interest rate is 1%.
e. the nominal interest rate is -1%.
 
 
2.
According to the law of demand, all other things being equal,
a. the quantity demanded falls when the price falls, and the quantity demanded rises when the price rises.
b. the demand falls when the price rises, and the demand rises when the price falls.
c. the demand falls when the price falls, and the demand rises when the price rises.
d. the quantity demanded falls when the price rises, and the quantity demanded rises when the price falls.
 
 
3.
Actions and activities are encouraged with which type of incentive?
a. unintended
b. positive
c. negative
d. complementary
 
 
4.
Aggregate demand is about _________ and aggregate supply is about _________.
a. production; spending
b. saving; profit
c. spending; production
d. production; income
e. income; spending
 
 
5.
A(n) _____________ in capital goods should ____________ worker productivity.
a. increase; have no effect on
b. decrease; increase
c. increase; decrease
d. increase; increase
e. decrease; have no effect on
 
 
6.
The basic goal of economics is:
a. controlling the effects of government actions.
b. addressing the scarcity problem created because the population's desire for goods exceeds the ability to produce them.
c. determining how to distribute all that is produced in an economy.
d. controlling tastes and wishes so that there will be enough resources to produce all the goods and services that people want.
 
 
7.
Between 2006 and 2010, per capita real gross domestic product (GDP) in India grew at an average rate of 7.11% per year. Which of the following factors would have contributed most to this rapid escalation in growth?
a. increases in government regulations
b. restrictions on immigration
c. decrease in education standards
d. advances in technology
e. a significant increase in taxes
 
 
8.
Economists refer to full-employment output as: 
a. potential GDP.
b. natural GDP.
c. real GDP.
d. gross domestic product (GDP) per capita.
e. nominal GDP.
 
 
9.
Farmer Bill grows wheat and sells it to the miller for $50,000. The miller turns it into flour and sells it to the bakery for $75,000. The bakery uses the flour in the bread that it sells to people for $90,000. The total contribution to GDP is:
a. $90,000.
b. $50,000.
c. $75,000.
d. $25,000.
e. $215,000.
 
 
10.
Firms that help to channel funds from savers to borrowers are known as:
a. marketers.
b. channelers.
c. financial intermediaries.
d. securities.
e. treasury securities.
 
 
11.
Fiscal policy include

a. increases and decreases to both taxes and government spending.
b. only increases and decreases to taxes.
c. only decreases in taxes and increases in government spending.
d. only increases in taxes and decreases in government spending.
e. only increases and decreases to government spending.
 
 
12.
The gap between the real and nominal interest rate represents
a. the difference from what the lender receives and the borrower pays.
b. consumption smoothing.
c. the inflationary premium.
d. a surplus of loanable funds.
e. the time preference.
 
 
13.
Given current resources and technology, the unattainable range is best described as:
a. points on the PPF only.
b. area I: inside the PPF and points on the PPF.
c. only area O: points outside the PPF.
d. only area I: points inside the PPF.
 
 
 
 
 
 
 
 
 
 
 
 

14.
Good: 2012 $: 2012 Qty: 2013 $: 2013 Qty:
A $2.00 500 $2.50 600
B $4.00 1,000 $5.00 900
C $2.00 200 $1.00 300

What was the real GDP in 2013?
a. $5,400
b. $6,450
c. $6,300
d. $13,600
e. $1,700
 
 
16.
Imagine that you deposit $25,000 in currency (which you had been storing in your closet), into your checking account at the bank. Assume that this institution has a required reserve ratio of 25%.

As a result of this deposit, by how much will the bank's required reserves increase?
a. $100,000
b. $0
c. $31,250
d. $25,000
e. $6,250
 
 
17.
An improvement in technology:
a. is one way to shift the demand curve.
b. shifts the supply curve to the left.
c. allows a producer to decrease output with the same amount of input.
d. allows a producer to increase output with the same amount of input.
 
 
18.
In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
a. The equilibrium price will be indeterminate and equilibrium quantity will go down.
b. The equilibrium price will be indeterminate and equilibrium quantity will go up.
c. The equilibrium price will go down and equilibrium quantity will be indeterminate.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
 
 
19.
An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an:
a. outward rotation along the y axis.
b. outward shift of the PPF.
c. outward rotation along the x axis.
d. inward shift of the PPF.
 
 
20.
Inflation creates uncertainty because:
a. although price confusion problems are eliminated, the shoe-leather costs are exacerbated.
b. real interest rates, prices, and wages are unknown.
c. borrowing continues at a rapid pace, creating a "false boom."
d. nominal values of prices and wages are unknown.
e. it rapidly increases output
 
 
21.
Joanna was laid off from her job 11 months ago. After searching for a job for months, Joanna finds a job but is only offered part-time work. Joanna would rather be working full-time. Economists would classify Joanna as:
a. underpaid.
b. a discouraged worker.
c. underemployed.
d. unemployed.
e. overemployed.
 
 
 
 
 
 
 
 
 

22.
Lenders in the loanable funds market consist of:
a. firms and governments.
b. arbitrage companies, banks, and firms.
c. households and foreign entities.
d. mutual fund firms, stock exchanges, and banks.
e. foreign governments, the domestic government, and households.
 
 
24.
New York Pizza Philly Cheesesteaks
Jay-Z 40 120
Alicia Keys 50 125

Given the same quantity of resources, what is Alicia Keys's opportunity cost of producing a New York pizza?
a. 1/3 New York pizza
b. 5/2 Philly cheesesteaks
c. 4/5 New York pizza
d. 2/5 Philly cheesesteak
 
 
25.
The nominal interest rate is
a. the interest rate that is corrected for inflation.
b. equal to the real interest rate minus the inflation rate.
c. the rate charged on loans for automobiles and other personal loans, but not the rate charged on home loans.
d. the rate of interest charged to most large commercial borrowers.
e. the interest rate that is not corrected for inflation.
 
 
26.
Price Qty. Demanded Qty. Supplied
$.75 100,000 65,000
$1.00 92,000 80,000
$1.25 86,000 86,000
$1.50 80,000 100,000
$1.75 75,000 115,000
$2.00 68,000 116,000

What is the quantity demanded when the price floor is $0.75 in the market for public transportation?
a. 116,000
b. 0 (zero)
c. 86,000
d. 75,000
 
 
27.
Real GDP is equal to:
a. current output / base year prices.
b. current prices x base year output.
c. current prices x current output.
d. base year prices x base year output.
Correcte. base year prices x current output.
 
 
28.
The short-run fluctuations in economic activity that can cause output to be above or below the long-run trend are called:
a. economic troughs.
b. economic contractions.
c. economic expansions.
d. business cycles.
e. economic peaks.
 
 
29.
Suppose advances in computer technology lead to a surge in worker productivity. In the long run, output will _________ and the price level will _________.
a. decrease; decrease
b. increase; remain unchanged
c. increase; decrease
d. increase; increase
e. remain unchanged; remain unchanged
 
 
30.
The United States has a:
a. regressive income tax system.
b. marginal income tax system.
c. good income tax system.
d. progressive income tax system.
e. bad income tax system.
 
 
 
 
 
 
 
 
 

31.
Which of the following is considered discretionary government spending?

a. payments to foreign bondholders
b. payments to unemployment insurance recipients
c. payments to food stamp recipients
d. payments to Social Security recipients
e. payments to government employees
 
 
32.
Which of the following is most liquid? 
a. checking deposits
b. savings deposits
c. credit cards
d. small time deposits
e. money market mutual funds
 
 
33.
Which of the following scenarios best describes the change in the equilibrium shown in the accompanying graph?
a. firms entering the market
b. buyers entering the market
c. an input cost decreasing
d. firms leaving the market
 
 
34.
Which of the following would be the theoretical outcome of contractionary fiscal policy in the following aggregate demand-aggregate supply model, where LRAS is long-run aggregate supply and SRAS is short-run aggregate supply?
a. The short-run aggregate supply (SRAS) curve would shift from SRAS2 to SRAS1.
b. The AD curve would shift from AD2 to AD1.
c. The AD curve would shift from AD1 to AD2 at the same time that the SRAS curve would shift from SRAS1 to SRAS2.
d. The SRAS curve would shift from SRAS1 to SRAS2.
e. The aggregate demand (AD) curve would shift from AD1 to AD2.
 
 
35.
Which of the following would cause a normal good's demand curve to shift to the left?
a. Income decreases.
b. The price decreases.
c. The price increases.
d. Income increases.
 
 
36.
Which of the following would cause an upward movement along the aggregate demand curve?
a. There is an increase in the expected price level.
b. An increase in the price level increases the value of real wealth.
c. An increase in housing prices increases the value of real wealth.
d. The value of the dollar increases.
e. There is an increase in expected income
 
 
37.
Why do shortages develop under a binding price ceiling?
a. It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
b. It encourages sellers to increase the quality of the product they sell, which, in turn, increases the quantity demanded.
c. It encourages sellers to produce more of the product.
d. It encourages buyers to purchase less of the product.
 
 
38.
Year: Nominal GDP: Real GDP: GDP Deflator
2009 ______________ $500 100
2010 $551.2 ___________ 106
2011 $600.6 $546 ____________
2012 ___________ $600.6 120

What is the value of real GDP in 2010? Round to the nearest second decimal
a. $584.27 million
b. $520.00 million
c. $657.20 million
d. $58,427.20 million
e. $445.20 million