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- 1. Multiple ChoiceThe business cycle describes the fact thatunemployment levels are constantly changingan economy's level of output fluctuates between times of recession and expansion.inflation rates are constantly changing.politicians usually pass laws that cause the economy to react in unpredictable ways.
- 2. Multiple ChoiceIn the long run, the economy of the United States hassteadily grown over time.steadily declined over time.behaved in ways that cannot be explained by modern macroeconomists.experienced drastic fluctuations, but it is back to its old levels now.
- 3. Multiple ChoiceThe general relationship between GDP and unemployment can be described asdirect; meaning that an increase in one variable usually signals an increase in the other variable.direct; meaning that an increase in one variable usually signals no change in the other variable.inverse; meaning that a decrease in one variable usually signals a decrease in the other variabled) inverse; meaning that an increase in one variable usually signals a decrease in the other variable.
- 4. Multiple ChoiceDuring recessions all of the following usually happen EXCEPTGDP decreases.unemployment increases.inflation increases.inflation decreases.
- 5. Multiple ChoiceWhen the economy experiences an expansion, it is most likely the case thatGDP is increasing, unemployment is increasing, and inflation is decreasing.GDP is increasing, unemployment is decreasing, and inflation is increasing.GDP is decreasing, unemployment is decreasing, and inflation is increasing.GDP is decreasing, unemployment is decreasing, and inflation is decreasing.
- 6. Multiple ChoiceIt is important to control the strength of expansions becauselong run growth is not desirable.it will help prevent recessions from happening.it is important to keep unemployment from getting too high.it is important to keep inflation from getting too high.
- 7. Multiple ChoiceGDP is an important economic measurement because itprovides valuable data on unemployment ratesmeasures the combined total of all intermediate and final goods produced.measures all final goods and services produced by a country.includes all economic activity, including financial transactions and purchases of used goods
- 8. Multiple ChoiceSuppose a miner harvests a ton of iron ore, an iron smelter turns the iron ore into steel, and a car manufacturer turns the steel into a car. If the miner adds a value of $1000, the iron smelter sells the steel for $3500, and the car manufacturer sells the car for $9000, how much has been added to GDP?$4500$8000$9000$13500
- 9. Multiple ChoiceWhich of the following is NOT included when calculating GDP for the United States?Cars manufactured in Japan, but sold in the United States.Cars manufactured in the United States, but sold in Japan.Cars manufactured in Michigan, but sold in MinnesotaCars manufactured in Michigan, but sold to the government.
- 10. Multiple ChoiceIn order to accurately compare GDP between different years, what must be removed from GDP?Investment spendingThe value added amountGovernment spendingChanges in price caused by inflation
- 11. Multiple ChoiceWhen using the income approach to calculate GDP, all of the following are necessary components EXCEPTwages.interest paid to lenders.consumer expenditures.profits.
- 12. Multiple ChoiceWhich of the following statements about nominal GDP and real GDP is true?Nominal GDP and real GDP are always the same in whichever base year has been chosen for calculation.Nominal GDP is always a larger number than real GDPNominal GDP and real GDP may have different levels, but they are always increasing.Nomial GDP is a more useful measurement when comparing levels of GDP over time
- 13. Multiple ChoiceIf using real GDP per capita for measurement, economists consider the poorest continent to beAsia.Europe.Africa.South America.
- 14. Multiple ChoiceWhen using the expenditure approach to calculate GDP, which of the following gets excluded?Consumer spendingBusiness investment spendingImportsGovernment spending
- 15. Multiple ChoiceAll of the following people are considered employed EXCEPTJen, who has been home sick for the last two weeks.Peter, who only worked at his job 3 hours last week.John, who has been on vacation from his job for one week.Harold, who began his job three weeks ago on his 15th birthday.
- 16. Multiple ChoiceAll of the following people are considered unemployed EXCEPTMolly, who has filled out 3 applications this week.Ryan, who currently serves in the military.Kyle, who only worked for 30 minutes last week.Brittany, who was recently fired from her job.
- 17. Multiple ChoiceIf a town has 60 employed workers and 15 unemployed workers, what is the town's unemployment rate?15%20%25%33%
- 18. Multiple ChoiceOne of the problems with unemployment rate is that itdoes not reflect workers who have given up searching for a job.is not measured accurately.counts underemployed workers as unemployed workers.does not count any workers above the age of 55.
- 19. Multiple ChoiceA worker who was laid off due to a downturn in the business cycle would be consideredfrictionally unemployed.structurally unemployed.cyclically unemployed.seasonally unemployed,
- 20. Multiple ChoiceIf an economy is at full employment, it has an unemployment rate that is called thenatural rate of unemployment.frictionally-adjusted unemployment rate.cyclically-adjusted unemployment rate.potential rate of unemployment.
- 21. Multiple ChoiceDuring times of economic recession the unemployment rate usuallystays around 25%.stays the same.increases.decreases.
- 22. Multiple ChoiceWhen the unemployment rate is relatively high,the growth in real GDP is high.the growth in real GDP is low.inflation is also relatively high.the amount of physical capital has decreased.
- 23. Multiple ChoiceThe Consumer Price Index (CPI)consists of items a typical 18-year old might buy for himself or herself.uses a representative market basket to calculate current price levels in an economy.is equal to 200 in whichever year is considered the base year.only increases in times of economic depression.
- 24. Multiple ChoiceIf the CPI is 125 in 2012 and increases to 130 in 2013, what is the inflation rate?3.8%4.0%5.0%96%
- 25. Multiple ChoiceThe difference between demand-pull inflation and cost-push inflation is thatdemand-pull inflation is caused by a drop in aggregate demand and cost-push inflation is caused by a rise in aggregate supply.demand-pull inflation is caused by a drop in aggregate supply and cost-push inflation is caused by a rise in aggregate demand.demand-pull inflation is caused by a rise in aggregate supply and cost-push-inflation is caused by a drop in aggregate demanddemand-pull inflation is caused by a rise in aggregate demand and cost-push inflation is caused by a drop in aggregate supply.
- 26. Multiple ChoiceIf a government decides to pay its debts by printing more money, the economy will likely encounterdramatic increases in inflation rates.excessive rates of inflation, which may lead to hyperinflation.high rates of inflation but very low rates of unemployment.problems with deflation.
- 27. Multiple ChoiceWhich of the following is NOT considered a cost of inflation?Shoe-leather costsOutput costsMenu costsunit of account costs
- 28. Multiple ChoiceThe short-run Phillips curvedemonstrates an inverse relationship between the inflation rate and the unemployment rate.is vertical.demonstrates the relationship between inflation and real GDP.demonstrates the same relationship between inflation and unemployment in the short run as in the long run.
- 29. Multiple ChoiceIf there is an increase in expected inflation the entire Phillips curve shiftsright.left.up.down.
- 30. Multiple ChoiceMost policy makers try to achieve an inflation rate of around 2%-3% becauseboth lenders and borrowers have come to expect these levels of inflation.this ensures the economy will run at full employment.it is high enough to avoid the problems of deflation, but low enough to avoid most problems associated with inflation.it is ideal to have expected inflation equal unexpected inflation.
- 31. Multiple ChoiceThe most important way that a country can achieve long run economic growth is toincrease the amount of goods and services it sells to other countries.have a steadily increasing population.increase its worker productivity.eliminate both recessions and economic expansions.
- 32. Multiple ChoiceHuman capital refers tothe infrastructure and machinery used to create a good or service.the money businesses spend on machinery and finances.the sophistication of the tools used in production.the training, knowledge, education, and expertise of a worker.
- 33. Multiple ChoiceAs a business adds more physical capital to its production process,each additional dollar spent will add less and less to worker productivity.worker productivity will eventually begin to decline.it becomes less likely that they will create a desirable product.worker productivity with increase by 1% for each additional 1% in physical capital.
- 34. Multiple ChoiceIncreases in technology willshift the productivity graph down, meaning each worker is less productive.shift the productivity graph up, meaning each worker is more productive.shift the productivity graph down, meaning each worker is more productive.shift the productivity graph up, meaning each worker is less productive.
- 35. Multiple ChoiceIf a country desires long run growth, it must possess each of the following EXCEPTproperty rights.political stability.small amounts of government intervention.a large population.
- 36. Multiple ChoiceIncreases in a country's real GDP per capita usually meanits standard of living has increased.its levels of poverty have increased.the country has a high standard of living.the country has low levels of poverty.
- 37. Multiple ChoiceOver the past 30 years, many countries (not all) in East Asia have experienced real GDP per capita levels that havestayed pretty much the same.dramatically increased.dramatically decreased.exceeded the U.S. levels.
- 38. Multiple ChoiceOver the past 30 years, many countries (not all) in Africa have experienced real GDP per capita levels that havestayed pretty much the same.dramatically increased.dramatically decreased.exceeded the U.S. levels.
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