AP Macroeconomics Unit 2 Review

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.

Alice, who has left her job in New York, is moving to Atlanta and looking for a job. In terms of employment status,

Alice can most accurately be described as

• (A) involuntarily unemployed

• (B) cyclically unemployed

• (C) seasonally unemployed

• (D) frictionally unemployed

• (E) not in the labor force

In an economy, the price index in 2006 was 100 and the real gross domestic product (GDP) was $1,000. In

2010, the price index was 110 and the nominal GDP was $2,200. Based on that information, which of the following

can be inferred about the economy’s nominal GDP and real GDP in 2010?

• (A) Nominal GDP in 2006 = $2000; Real GDP in 2010 = $1,000

• (B) Nominal GDP in 2006 = $1000; Real GDP in 2010 = $2000

• (C) Nominal GDP in 2006 = $1100; Real GDP in 2010 = $2420

• (D) Nominal GDP in 2006 = $1000; Real GDP in 2010 = $2420

• (E) Nominal GDP in 2006 = $1100; Real GDP in 2010 = $2200

The table above gives population and labor-market data for an economy. The unemployment rate in this economy is

• (A) 3.3%

• (B) 5%

• (C) 10%

• (D) 33.3%

• (E) 50%

The country's gross domestic product is

• (A) $220 billion

• (B) $282 billion

• (C) $304 billion

• (D) $309 billion

• (E) $347 billion

If a worker’s nominal wage rate increases from $10 to $12 per hour and at the same time the general price level

increases by 10 percent, the worker’s real wage has

• (A) approximately decreased by 10%

• (B) approximately decreased by 20%

• (C) approximately increased by 10%

• (D) approximately increased by 20%

• (E) not changed

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

• (A) The business sector

• (B) The government

• (C) The household sector

• (D) Financial sector

• (E) The foreign sector

A continuous increase in the consumer price index is

• (A) deflation

• (B) stagflation

• (C) inflation

• (D) recession

• (E) disinflation

In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The

inflation rate in 2018 was 2%. How did Sabrina’s nominal income and real income change in 2018 compared to

2017?

• (A) Nominal income decreased and real income decreased.

• (B) Nominal income decreased and real income did not change.

• (C) Nominal income increased and real income decreased.

• (D) Nominal income increased and real income did not change.

• (E) Nominal income increased and real income increased.

If purchases of education and medical care were counted as investment rather than consumption, gross domestic

product would

• (A) not change, because there is no change in total expenditures

• (B) increase, because investment is included in gross domestic product but consumption is not

• (C) increase, because consumption is included in gross domestic product but investment is not

• (D) decrease, because investment is weighted more heavily than consumption in calculating gross domestic product

• (E) decrease, because consumption is weighted more heavily than investment in calculating gross domestic product.