AP Econ Unit 3 Test

An example of frictional unemployment is a(n):

• worker at a fast food restaurant who quits work and attends college full time

• autoworker who is temporarily laid off from an automobile company due to a decline in sales

• geologist who is permanently laid off from an oil company due to a new technological advance

• autoworker who is not working because he is currently on strike from his job at the production factory

• real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California

The aggregate price level is:

• the average price of commodities

• the overall level of wages in the economy

• the overall level of prices in the economy

• the average price of shares on the stock market

• the average rate of inflation

An Intermediate good would be:

• A professors salary

• lumber used in building a house

• a new boat purchased by a professor to be used on vacation

• the natural gas used to heat the professors home

• government purchases of military equipment

Which one of the following transactions is included in a current year's GDP as investment spending?

• Anton purchased his friends condo

• Melanie bought a new washing machine for her condominium

• Maggie bought a play gym set for her day care business

• ABC company purchased 10,000 shares of IBM stock

• Ronnie bought a new BMW

Which of the following annual rates of inflation would most likely be called hyperinflation?

• 5%

• 2000%

• 25%

• 15%

• 13%

When the economy is in recovery, cyclical unemployment is _____________ and the actual unemployment rate is _________ the natural rate of unemployment

• falling; rising and greater than

• equal to zero; rising and greater than

• falling; falling closer to

• equal to zero; rising and equal to

• rising; equal to

Unemployment that results when there are more people seeking jobs in a labor market than there are jobs available is considered

• frictional unemployment

• seasonal unemployment

• structural unemployment

• cyclical unemployment

• natural unemployment

An example of investment spending is:

• the purchase of a stock shares by a mutual fund

• the amount of funds raised by the government in the financial markets

• the purchase of a freezer by an ice cream parlor

• the purchase of government bonds by a private household

• the payment of dividends to a corporations shareholders

Which of the following represents the best scenario for a bank lending money to its customer?

• fixed interest rate of 12% with 7% inflation

• fixed interest rate of 19% with 15% inflation

• fixed interest rate of 8% with 1% inflation

• fixed interest rate of 10% with 7% inflation

• fixed interest rate of 11% with 5% inflation

In 2007, the Bureau of Labor Statistics calculated the unemployment rate to be 7.5%. If the frictional unemployment was 1% and the structural unemployment was 1.5%, then the natural rate of unemployment would be

• 5%

• 7.5%

• 4.5%

• 1%

• 5.5%