AP Macro Activity 3

AP Macro Activity 3

Multiple Choice

A nation's gross domestic product (GDP):

• is the dollar value of the total output produced within the borders of the nation.

• is the dollar avlue of the total output produced by its citizens, regardless of where they are living.

• can be found by summing C + In + S +Xn

• is always some amount less than its C + Ig + G + Xn.

Multiple Choice

An example of an intermediate good or service would be:

• bricks bought by a homeowner for contruscting a patio.

• sacks of groceries bought by a dentist for his family.

• a car bought by a household for commuting to work.

• a desk bought by an accountant for her office.

Multiple Choice

Real GDP measures:

• current output at current prices.

• current output at base year prices.

• base year output at current prices.

• base year output at current exchange rates.

Multiple Choice

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C=5. The current year per unit prices of these goods are A = $2, B = $3, and C = $1. Nominal GDP in the current year is:

• $110

• $115

• $45

• $90

Multiple Choice

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C=5. If the per unit prices of the three goods each were $1 i a base year used to construct a GDP price index, then real GDP in the current year:

• is $110

• is $115

• is $45

• cannot be determined on the basis of this data.

Multiple Choice

Assuming the total population is 100 million, the civilian labour force is 50 million, and 47 million workers are employed, the unemployment rate:

• is 3 percent.

• is 6 percent.

• is 7 percent.

• is 9 percent.

Multiple Choice

Assume Smith is temporraily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with comapny B. Smith will be considered as:

• cyclically unemployed.

• frictionally unemployed.

• secularly unemployed

• employed

Multiple Choice

If the unemployment rate is 9 percent and the natural rate of unemploument is 7.5 percent, then the:

• frictional unemployment rate is 7.5 percent.

• cyclical unemployment rate and the frictional unemployment rate together are 7.5 percent.

• cyclical unemployment rate is 1.5 percent

• natural rate of uemployment will eventually increase.

Multiple Choice

Inflation means:

• all prices are rising, but at different rates.

• all prices are rising and at the same rate.

• each unit of a currency (such as Canadian dollar) buys more goods and services.

• the continual rise in the general level of prices.

Multiple Choice

Real income can be determined by:

• dividing the price level by nominal income.

• inflating nominal income for inflation.

• dividing the annual rate of inflation into the number "70."

• dividing the nominal income by the price index.

Multiple Choice

If a person's nominal increases by 2% while the price level increases by 6%, the person's real income:

• increases by about 2%.

• increases by about 4%.

• decreases by about 6%.

• decreases by about 2%.

Multiple Choice

The consumer price index (CPI):

• uses a fixed market basket set in the base year for all susequent years.

• is also called the GDP price index.

• measures the changes in the prices of amarket basket of some 50,000 goods and services.

• is adjusted annually for changes in consumer spending patterns.