Macroeconomics Unit 2 Quiz

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

• Intermediate goods are not counted because GDP does not include imports from foreign countries

• Household production, like home auto repair, is counted in GDP

• Transfer payments are not included in GDP because government expenditures are not counted

• GDP includes the purchase and sale of all goods and services in a country in one year

• GDP, adjusted for inflation, measures economic growth over time

Which of the following is included in the calculation of the U.S. GDP?

• The money that consumers save when using coupons

• The benefit society receives from a cleaner environment

• Online purchases of used products

• A computer produced in China by a U.S. owned company

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

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

• Foreign countries buying US treasury bills

• Transfer payments to the elderly

• Salary bonuses given to investment bankers

• Undeclared wages paid to illegal aliens

• The change in the value of real estate in the US

When calculating GDP, investment is best defined as

• spending on stocks, bonds, and financial assets

• spending by the central bank on government securities

• changes in private and business savings

• business spending on capital goods

• policies that lead to long run economic growth

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

• The inflation rate was negative

• The real GDP increased

• The price level increased

• Both the price level and real GDP increased

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

• An electrician that is working part-time and is looking for a full-time job.

• A retired school teacher

• A 15 year-old who is looking for odd jobs to pay for summer camp.

• An auto worker who has given up looking for a job

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?

• Less workers were classified as part-time workers

• The total number of jobs in the economy increased

• The total number of jobs in the economy decreased

• The total number of jobs in the economy stayed the same

• The nominal GDP will increase

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

• New immigrants have a hard time finding jobs

• Workers are laid off due to a recession

• Workers quit their current job to go back to school to get better training

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

• Workers enter the labor force because wages are increasing

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

• Cyclical

• Seasonal

• Structural

• Frictional

• Technological

Which of the following is true regarding full employment?

• An economy is at full employment when the unemployment rate is 0%

• An economy can never been at full employment since there are always leakages like taxes, savings, and imports

• Full employment occurs when cyclical unemployment is zero

• Full employment occurs when there is only frictional unemployment

• Full employment is shown as a rightward shift in the production possibilities curve.