AP Macro Unit 2 Review

GDP

GDP does NOT account for which of the following?

• The value added by all firms in the economy

• The depletion of natural resources

• Wages, rent, profit, and interest payments

• The value of final goods and services produced domestically

• Imports from foreign countries

Which of the following transactions will be included in the calculation of Country X's Gross Domestic Product in 2020?

• The sale of corporate stocks

• The exchange of a used automobile for a used boat

• The purchase of new construction equipment

• Social Security checks received by retirees

• Carrots grown in a household’s backyard and consumed by the family

The circular flow model illustrates the equality of which of the following?

• Total expenditure and total income

• Savings and consumption

• Total income and government spending

• Total expenditure and wages

• Exports and imports

As a measure of economic performance, accounts for which of the following?

• Used books donated to a local library

• Depletion of durable consumer goods

• Increased leisure time

• Souvenir gifts purchased by tourists domestically

• Cash transactions in the underground economy

Potential gross domestic product will decrease under which of the following conditions?

• The growth rate of the population increases more rapidly than the growth rate of gross domestic product.

• Nominal gross domestic product increases more than real gross domestic product.

• The natural rate of unemployment decreases.

• The country’s annual depreciation is greater than its annual gross investment.

• The monetary authorities adopt an easy monetary policy

Which of the following is most likely included in gross domestic product?

• A Matt gives his secondhand bicycle to his brother.

• B Sal paints his own bicycle.

• C Ali buys a new bicycle.

• D Mike buys a share of stock in a bicycle firm.

• E Daniel bikes to school every day.

• $220 billion

• $282 billion

• $304 billion

• $309 billion

• $347 billion

In the circular flow diagram of a market economy, which of the following supplies the factors of production?

• The business sector

• The government

• The household sector

• Financial sector

• The foreign sector

Which of the following represents a leakage from the circular flow in an economy?

• Consumption spending

• Government spending

• Investment spending

• Unemployment benefits

• Imports

The circular-flow model indicates that final goods are produced by____

• firms and sold in the factor markets

• firms and sold in the product markets

• firms and sold in the resource markets

• households and sold in the factor markets

• households and sold in the product markets