AP Macroeconomics Unit 2 Review

What does GDP stand for?

• Gross Domestic Product

• Gross Domestic Performance

• General Domestic Product

• General Domestic Performance

What does the expenditures approach to measuring GDP include?

• Value added at each stage of production

• All of the above

• Consumer spending, investment, government spending, and net exports

• Wages, rent, interest, and profit

Which of the following is NOT included in GDP calculations?

• Consumer spending

• Investment by businesses

• Intermediate goods

• Government spending

What does the circular flow model illustrate?

• The calculation of GDP

• The process of inflation

• The interaction between households and businesses

• The flow of financial resources

Which of the following is a limitation of GDP as an economic measure?

• It does not account for non-market transactions

• It counts intermediate goods

• It overestimates the value of digital goods

• It includes illegal transactions

Which type of unemployment is due to the economic recession?

• Structural unemployment

• Natural unemployment

• Frictional unemployment

• Cyclical unemployment

What is the natural rate of unemployment?

• The rate when cyclical unemployment is zero

• The rate including only structural unemployment

• 0%

• The rate including only frictional unemployment

What is the most commonly used measure of inflation?

• Retail Price Index (RPI)

• Producer Price Index (PPI)

• Consumer Price Index (CPI)

• GDP deflator

Who benefits from unanticipated inflation?

• Borrowers

• Fixed income earners

• Savers

• Lenders

What does the GDP deflator measure?

• The deflation rate of an economy

• The change in consumer price index

• The change in prices of all new, domestically produced, final goods and services in an economy

• The inflation rate in the consumer market