Economic Measurements test review

Unemployment is when people do not have jobs and are actively looking for one.

• True

• False

Which of the TWO of the following ARE NOT included when calculating GDP for the United States?

• Shirts manufactured in Mexico, but sold in the USA

• Cars manufactured in China, but sold in the USA

• Cars manufactured in the United States, but sold in China.

• Cars manufactured in Texas, but sold in Minnesota

• Cars manufactured in Texas but sold to the USA government.

Which of the following is true if real GDP in Year 1 is $5,000 and in Year 2 is $5,200?

• Output has decreased by 4 percent

• Output has increased by 4 percent

• The economy is experiencing a recession.

• The economy is experiencing 4 percent inflation.

The CPI tends to overstate true changes in the cost of living for which of the following reasons? (pick 3) 

• The index does not take into account a change in quality.

• Consumers often buy at discount rather than retail.

• The CPI includes only domestically produced goods. 

• Consumers change purchase patterns as prices change.

The general relationship between GDP and unemployment can be described as

• direct; meaning that an increase in one variable usually signals no change in the other variable.

•  inverse; meaning that a decrease in one variable usually signals a decrease in the other variable

• inverse: meaning that an increase in one variable usually signals a decrease in the other variable

• direct; meaning that an increase in one variable usually signals an increase in the other variable.

If the actual unemployment rate is 7% and the natural rate of unemployment is 5%, then the cyclical unemployment rate is:

• 12%

• 2%

• -2%

The market value of all final goods and services produced in the economy in a given year is

• net national product

• National income

• gross domestic product

Inflation can be measured by

• the percentage change in cpi

• the price of gas

• analysis of the money supply

Which of the following people would be considered unemployed?

• 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 quits work to care for aging parents

• A person who works two part-time jobs but is looking for a full-time job

Which of the following is the best measure of the production or output of an economy?

• Unemployment rate

• prime interest rate

• consumer price index

• gross domestic product