AP Macro 2.1-2.5 Review

Which of the following will lead to an increase in the United States GDP?

• More individuals prepare their own personal income tax forms.

• Some citizens begin working abroad as computer programmers.

• The government prohibits the sale of alcoholic beverages.

• Foreign companies build new assembly plants in the U.S.

Which of the following best illustrates an improvement in a country's standard of living?

• An increase in real GDP per capita

• Price stability

• A balanced budget

• Increase in the consumer price index

For an economy consisting of households and businesses only, which of the following is consistent with the circular flow of income and production?

• households are producers of goods and services and consumers resources.

• Households are users of resources, and businesses are sources of saving.

• Households are suppliers of resources and consumers of goods and services.

• Businesses are users of taxes, and households are sources of taxes.

Which of the following will be counted as unemployed by the U.S. Bureau of Labors Statistics?

• Persons who quit their previous jobs to stay at home to care for sick parents.

• Persons who were laid off from their previous jobs and have not applied for a job in two years.

• Persons who were fired from their previous jobs and are actively applying for work.

• Persons who have given up looking for jobs after long searches.

The official unemployment rate understates the unemployment level in the economy because the official unemployment rate...

• ignores the duration of unemployment

• ignores underemployed and discouraged workers

• includes jobs created by the underground economy

• excludes all unemployed teenagers

Which type of unemployment would increase if workers lost their jobs because of a recession?

• Cyclical

• Frictional

• Seasonal

• Structural

Which of the following groups would most likely gain from unanticipated inflation?

• Landlords who own apartments in cities with rent controls

• Individuals who have fixed retirement incomes

• Individuals who earn high incomes

• Individuals who have borrowed money at fixed interest rates

The consumer price index (CPI) is designed to measure changes in the

• spending patterns of urban consumers only

• spending patterns of all consumers

• wholesale price of manufactured goods

• cost of a select market basket of goods and services

Hyperinflation is typically caused by

• high tax rates that discourage work effort

• continuous expansion of the money supply to finance government budget deficits

• trade surpluses that are caused by strong protectionist policies

• a large decline in corporate profits that leads to decrease in production