AP Macroeconomics Unit 2/3

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

• Government purchases of navy ships

• The purchase of a used car from a friend

• The purchase of a vintage surfboard from thrift store

• Social Security checks

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 $3.00 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 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 increasing in the economy

• Une mployment is decreasing in the economy

• Consumers paid 10% higher prices since the base year

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

The natural rate of unemployment

• Is zero percent unemployment

• Is when cyclical unemployment is less than frictional unemployment

• Is the sum of frictional and structural unemployment

• Results in higher cyclical unemployment

• Can never decrease since it represents the optimal amount if unemployment

 The unemployment rate measures the percentage of 

• People in the adult population who do not have jobs

• People who do not have jobs and have given up looking for work

• People in the labor force who have a part-time job but are looking for a full-time job

• People in the labor force who are actively looking, but do not have jobs

• People in the adult population who have temporary jobs

An economy produces two goods: hot dogs and burgers.

In 2014, 15 hot dogs are produced at a price of $2 each, and 20 burgers at a price of $7 each.

In 2015, 20 hot dogs are produced at a price of $4 each, and 30 burgers at a price of $8 each.

Calculate the nominal GDP in 2014.

• $100

• $170

• $250

• $220

• $30

An economy produces two goods: hot dogs and burgers.

In 2014, 15 hot dogs are produced at a price of $2 each, and 20 burgers at a price of $7 each.

In 2015, 20 hot dogs are produced at a price of $4 each, and 30 burgers at a price of $8 each.

Calculate the deflator in 2015. Use 2014 as base year.

• 100

• 128

• 178

• 1.28

• 250