AP Macro Economic Indicators

Gross Domestic Product is equivalent to the sum of

• consumer spending, investment spending, government purchases, exports, and imports

• consumer spending, investment spending, government purchases, and exports

• consumer spending, consumption of fixed capital, government purchases and exports

• consumer spending, inventory spending, government purchases and net exports

• consumer spending, investment spending, government purchases and net exports

Which of the following will be included in the current year's calculation of GDP?

• $50 cash earned but not reported by your neighbor for babysitting

• income earned as a lifeguard at a summer camp

• the purchase of a used car from a friend

• the purchase of a vintage surfboard from a thrift store

• the purchase of one company by another company

Which of the following would represent an addition to a nation's GDP?

• Ms. Jones purchases a share of stock in a tech start-up company

• an auto retailer purchases imported cars

• the government hires workers to install streetlights

• a business sells used watches

• a mother prepares a home cooked meal for her family

If real GDP is increasing at 5% per year and nominal GDP is increasing at 10% per year, which of the following is necessarily true?

• unemployment is increasing

• the economy is in a recession

• the price level is increasing

• the government is running a budget surplus

• imports exceed exports

As a measure of economic welfare, GDP underestimates a country's production of goods and services when there is an increase in

• the production of naval ships for the military

• household production

• the production of solar panel devices

• legal protective services

• crime prevention services

Assume the CPI increases from 100 to 120 between 2014 and 2015. Which of the following must be true?

• a gallon of gas that was $2.50 in 2014 will be $3 in 2015

• the price for all goods increased between 2014 and 2015

• there was unanticipated inflation

• the average price of a specific market basket increased by 20%

• there was disinflation

If the Consumer Price Index changes from 100 to 90, economists will know that

• there was deflation in the economy

• there was disinflation in the economy

• unemployment is decreasing in the economy

• consumers paid 10% higher prices since the base year

• unemployment is increasing in the economy

Which of the following is most true regarding unanticipated inflation?

I. Workers with fixed wage rates are hurt by unanticipated inflation

II. Employers that charge fixed wages are hurt by unanticipated inflation

III. Lenders with fixed rate loans are helped by unanticipated inflation

IV. Borrowers who have fixed rate loans are helped by unanticipated inflation

• I and III

• I and IV

• II and III

• II and IV

• inflation hurts all members of the economy equally

A mechanic that leaves his job working on cars and is currently looking for a job working on planes is considered

• frictionally unemployed

• seasonally unemployed

• structurally unemployed

• cyclically unemployed

• not in labor force

Nicole was laid off as a waitress when her restaurant closed down due to the slow economy. Nicole is considered

• frictionally unemployed

• seasonally unemployed

• structurally unemployed

• cyclically unemployed

• not in the labor force