AP Macro Unit 2 Test Review

If a worker’s nominal wage rate increases from $10 to $12 per hour and at the same time the general price level increases by 10 percent, the worker’s real wage has

• approximately decreased by 10%

• approximately decreased by 20%

• approximately increased by 10%

• approximately increased by 20%

• not changed

The value of which of the following is counted in the United States gross domestic product?

• clean air

• child care a father provides for his

  child

• an automobile produced in Sweden by a

  United States firm

• a car produced in the United States and

  sold in Europe

• medical services not provided due to

  preventative health care

The annual inflation rate is expected to be 5 percent over the next 3 years. Juan plans to take out a 3-year loan to purchase an automobile. If Juan decides not to take out the loan if the real interest rate exceeds 3 percent, the highest nominal interest rate he is willing to pay is

• 2 percent

• 3 percent

• 8 percent

• 15 percent

• 25 percent

Which of the following is true about the national debt of the United States?

• it is the debt owed to foreign investors

• it is the accumulation of past and

  current budget deficits and surpluses

• it increases when gross domestic product

  increases

• it increases when exports decrease, and

  decreases when exports increase

• it did not exist before 1980

An industry historically used employees with specific skills. If this industry experiences technological advances that require new skills, there will most likely be

• cyclical unemployment

• frictional unemployment

• seasonal unemployment

• structural unemployment

• no change in unemployment

Which of the following would cause the official unemployment rate to understate the problem of unemployment?

• Workers receiving unemployment compensation

• Cyclically unemployed workers

• Discouraged workers

• Recent college graduates looking for work

• Retirees

Which of the following individuals is classified as unemployed?

• A fifteen-year-old high school student who is looking for a babysitting job

• a laid-off computer programmer who has given up looking for a new job

• a parent who works in an after-school day care center for 15 hours a week

• a recent college graduate who is looking for her first job

• a mayor who lost an election and retired

In a measurement of gross domestic product, investment includes spending by

• business on capital goods and changes in inventories

• businesses on stocks, bonds, and other financial assets

• individual households on stocks, bonds, and other financial assets

• the federal government to purchase bonds issued by the Federal Reserve

• the Federal Reserve to buy government bonds

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

• neither the price level nor the real GDP has increased

• the price level increased by a larger percentage than did the real GDP

• the price level increased by a smaller percentage than did the real GDP

• the price level and/or the real GDP has increased

Gross domestic product has been criticized as a measure of well-being because it fails to take into account which of the following?

• the distribution of income

• the value of services

• the value of intermediate goods

• the value of financial transactions and sales of used items

• the value of government services