Unit 2 Review (Economics)

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

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

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

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

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

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

The nominal GDP for the year 2010 is $120 billion and the nominal GDP for the year 2012 is $240 billion. Assuming that the year 2010 is the base year and that the real GDP of the year 2012 is $200, what is the GDP defaltor in 2012?

• 150

• 200

• 50

• 120

• 100

If a country's nominal percent change in GDP is positive, which of the following must be true?

• The real GDP increased

• the inflation rate was negative

• Both price level and real GDP increased

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

• The price level increase

Which of the following will most likely decrease a country's Natural Rate of Unemployment (NRU)?

• A decrease in cyclical unemployment

• An increase in the labor force

• A decrease in unemployment benefits paid by the government

• An increase in structural unemployment

• A short run increase in domestic output

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

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

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

• Online purchases of used products

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

• Salary bonuses given to investment bankers

• The change in the value of real estate in the U.S.

• Undeclared wages paid to illegal aliens

• Foreign countries buying US treasury bills

• Transfer payments to the elderly

Which of the following is true regarding inflation?

• The Consumer Price Index (CPI) shows the change in price of all consumer products in a country

• unanticipated inflation benefits lenders

• Inflation causes unemployment

• When inflation increases, nominal interest rates decrease

• Inflation decreases the purchasing power of a country's currency

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

• Frictional

• Structural

• Seasonal

• Technological

• Cyclical

When calculating GPD, investment is best defined as

• changes in private and business savings

• spending on stocks bond and financial assets

• spending by the central bank on government securities

• business spending on capital goods

• policies that leaf to long run economic growth

Which of the following is true regarding the quantity theory of money?

• Of the velocity of money is negative then unemployment will increase

• An increase in the money supply or the velocity of money will increase nominal output

• An increase in the velocity of money will increase real output

• A decrease in the money supply will decrease the velocity of money

• An increase in price level will lead to an increase in interest rates.