AP Macro Measures

Which of the following is LEAST likely to promote economic growth?

• Investment in tools and machines

• Investment in training of labor

• Increase in consumption of nondurable goods

• Tax credit for technology improvement

• Increase in the labor force participation rate

The consumer price index (CPI) is criticized for

• overstating the true burden of inflation because it does not recognize consumers’ ability to substitute goods and services as prices change

• overstating the true burden of inflation because it recognizes consumers’ ability to substitute goods and services as prices change

• understating the true burden of inflation because it does not recognize consumers’ ability to substitute goods and services as prices change

• understating the true burden of inflation because it recognizes consumers’ ability to substitute goods and services as prices change

• overstating the true burden of inflation because it reflects the prices of both intermediate goods and final goods

Frictional unemployment occurs when which of the following happens?

• A worker is replaced by robots on factory assembly lines.

• A worker voluntarily quits a job to search for a better one.

• A worker is laid off because of a downturn in economic activity.

• A worker undergoes on-the-job training.

• A worker switches from working full-time to part-time

Country A’s growth rate in per capita real gross domestic product (GDP) has been consistently higher than that of Country B. Which of the following factors can account for these differences in the per capita GDP growth rates?

• Country B’s government gives more investment tax credits.

• The labor force of Country A is becoming more skilled than the labor force of Country B.

• The natural rate of unemployment is higher in Country A.

• Country A’s central bank is less effective at controlling the inflation rate.

• Although the populations of Countries A and B are the same, Country A has twice as many people who are retired.

The natural rate of unemployment can be defined as the

• unemployment rate consistent with accelerating inflation

• unemployment rate of the least-skilled workers

• economy’s long-run equilibrium rate of unemployment

• labor force participation rate plus the unemployment rate

• labor force participation rate minus the unemployment rate

If unemployed workers become discouraged and give up trying to find work, the number of workers employed and the unemployment rate would change in which of the following ways?

Number of Workers Unemployment

Employed Rate

• Decrease Decrease

• Decrease Increase

• Decrease No Change

• No change Decrease

• No change Increase

Which of the following people would be considered unemployed?

• a person who quits work to care for aging parents

• a person who stayed home to raise his children and

  now starts looking for a job

• a person who quits a job to return to school full time

• a person who is qualified to teach but is driving a bus

• a person who works two part-time jobs but is looking

  for a full-time job

Which of the following purchases is included in the calculation of gross domestic product

• a used economics textbook from the bookstore

• new harvesting equipment for the farm

• 1,000 shares of stock in a computer firm

• a car produced in a foreign country

• government bonds issued by a foreign firm

Which of the following is at its highest at the trough of a business cycle?

• gross domestic product

• employment

• inflation

• economic growth

• unemployment

If GDP is declining, the economy is most likely in which phase of the business cycle?

• (A) recovery

• B) expansion

• (C) trough

• (D) contraction

• (E) peak