WorksheetsAP Unit 2 GDP
Total questions: 45
Worksheet time: 23mins
In the circular flow diagram, which of the following is true in the product market?
Households sell goods and services to business firms
Households sell resources to business firms
Business firms sell resources to households
Business firms sell goods and services to households
Households buy resources from business firms
In the circular flow diagram, which of the following is true in resource or factor markets?
Households buy resources from business firms
Households sell products to business firms
Households sell resources to business firms
Business firms sell goods and services to households
Business firms sell resources to households
Which of the following is the best measure of the production or output of an economy?
Consumer Price Index
Unemployment Rate
Gross Domestic Product
Prime Rate
Index of Leading Indicators
The market value of all final goods and services produced in the economy a given year is
Net national product
National income
Personal income
Gross domestic product
Producer price index
Which of the following people would be considered unemployed?
A person who quits work to care for aging parents
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 is qualified to teach but is driving a bus until a teaching job is available
A person who works two part time jobs but is looking for a full time job
1. In the gross domestic product, the largest dollar amount is
Consumer spending
Rental payments
Net exports of goods and services
Gross domestic investment
Government purchases of goods and services
The largest dollar amount of gross domestic product is
Rental payments
Government expenditures on goods and services
Profit
Net interest
Wages and salaries paid to employees
Which of the following purchases is included in the calculation of gross domestic product?
A used economics textbook from the bookstore
New harvesting equipment for the farm
1,000 shares of stock in a computer firm
A car produced in a foreign country
Government bonds issued by a foreign firm
Which of the following would be included in the calculation of gross domestic product?
Government purchase of a new submarine
Social security payments to a retired military officer
The purchase of a homebuilt 10 years ago
Contributions to a charity organization
Work performed by a barber who cuts the hair of his or her own children
1. Which of the following would be counted as investment when calculating gross domestic product?
The purchase of a used computer by a n auto manufacturer
The purchase of a share of IBM stock by an employee
The construction of a new house
The construction of roads by the government
The profit earned when selling shares of stock
Which of the following would be an example of an intermediate good or service?
A calculator purchased by a college student for taking exams
Gasoline purchased by an insurance agent to visit clients a their homes
A house purchased by a family with four children
A car purchased by a student’s parents and given to the student
Tuition paid by a student at a state university
Of the following, which is the best example of structural unemployment?
A computer programmer who quits her job to move to a warmer climate
A construction worker who loses his job in the winter
An auto worker who losses her job in a recession
A steel worker who is replaced by a robot
A toy maker who worked for a company that closed because consumers didn’t buy the toys
If the price index in a country were 100 for the year 2000 and 120 for the year 2003 and nominal gross domestic product in 2003 were $480 billion, then real gross domestic product for 2003 in 2000 dollars would be
About $360 billion
About $380 billion
About $400 billion
About $600 billion
Indeterminate with the given information
1. The value of the gross domestic product in 2000, in terms of 1990 prices , was
$600
$700
$1,000
$1,200
$1,300
If 2000 were made the base year for the GDP price deflator index, the value of the index number for 1990 (rounded to the nearest whole number) would be
Zero
42
142
212
256
The CPI tends to overstate true changes in the cost of living for which of the following reasons?
I. The index does not take into account a change in quality
II. Consumers change purchase patterns as prices change
III. The CPI includes only domestically produced goods
IV. Consumers often buy at discount rather than retail
I only
I and II only
I, II, and III only
I, II, IV only
I, II, III, and IV
Which of the following is true about the natural rate of unemployment?
It can vary over time (be changed)
It is 2% or less of the civilian labor force
It is equal to the structural unemployment rate
It allows for some frictional and cyclical unemployment
It is the full-employment rate minus the cyclical unemployment rate
Suppose a factory added $5,000 worth of output this year. Incidentally, the waste from the factory caused $1,000 worth of loss to the neighboring waterways. As a result, gross domestic product would
Increase by $5,000
Increase by $4,000
Increase by $ 1,000
Decrease by $4,000
Decrease by $1,000
Which of the following is true if real GDP in year 1 is $5,000 and in year 2 is $5,200?
Output has increased by 4 percent
Output has declined by 4 percent
Output change is uncertain
The economy is experiencing 4 percent inflation
The economy is experiencing a recession
When the actual inflation rate is greater than the anticipated inflation rate, which of the following is most likely to suffer?
Those who lend at a fixed interest rate
Those who borrow at a fixed interest rate
Retired persons with cost-of-living adjustment in their benefits
Employers who hire workers with long term labor contracts
Those who lend with flexible interest rates
For a nation's real GDP per capita to rise during a year:
consumption spending must increase.
real GDP must increase more rapidly than population.
population must increase more rapidly than real GDP.
investment spending must increase.
Given the annual rate of economic growth, the "rule of 70" allows one to:
determine the accompanying rate of inflation
calculate the size of the GDP gap.
calculate the number of years required for real GDP to double.
determine the growth rate of per capita GDP.
At an annual growth rate of 7 percent, real GDP will double in about:
11 ½ years
10 years.
13 ½ years.
9 years.
Market economies have been characterized by:
occasional instability of employment and price levels.
uninterrupted economic growth.
persistent full employment.
declining populations.
The production of durable goods varies more than the production of nondurable goods because:
durable purchases are non-postponable.
durable purchases are postponable.
the producers of nondurables have monopoly power.
producers of durable are highly competitive.
Assuming the total population is 100 million, the civilian labor force is 50 million, and 3 million workers are unemployed, the unemployment rate is:
3 percent.
6 percent.
7 percent.
9 percent.
Cyclical unemployment results from:
a deficiency of aggregate spending.
the decreasing relative importance of goods and the increasing relative importance of services in the U.S. economy.
the everyday dynamics of a free labor market.
technological change.
Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:
frictional unemployment
structural unemployment
cyclical unemployment.
Seasonal unemployment.
1. A large negative GDP gap implies:
an excess of imports over exports.
low rate of unemployment.
a high rate of unemployment.
a sharply rising price level.
Which of the following best describes an economy at full employment?
The rate of unemployment is zero
There is frictional, but not cyclical unemployment
There is only structural and cyclical unemployment
There is only cyclical unemployment
There is cyclical, but not structural unemployment
1. Inflation means that:
all prices are rising, but at different rates.
all prices are rising and at the same rate.
prices in the aggregate are rising, although some particular prices may be falling.
real incomes are rising.
"Too much money chasing too few goods" best describes:
the GDP gap.
demand-pull inflation.
the inflation premium.
cost-push inflation.
Inflation initiated by increases in wages or other resource prices is labeled:
demand-pull inflation.
demand-push inflation.
cost-push inflation.
cost-pull inflation.
Dissaving means:
the same thing as disinvesting.
that households are spending more than their current incomes.
that saving and investment are equal.
that disposable income is less than zero.
Suppose that in a particular country, nominal gross domestic product (GDP) grew 8 percent, and the GDP deflator increased by 10 percent. The country’s growth rate of Real GDP would be approximately equal to
-2%
-8%
0.8%
2%
Other things equal, a 10 percent decrease in corporate income taxes will:
decrease the market price of real capital goods.
have no effect on the location of the investment-demand curve.
shift the investment-demand curve to the right.
shift the investment-demand curve to the left.
According to the income and consumption schedules shown above, the marginal propensity to consume is
1.33
.90
.75
.80
Refer to the above table. The marginal propensity to consume is:
.5.
.75
.8
.9
Refer to the above table. The marginal propensity to save is:
.5
.25
.1
.2
Refer to the above table. The multiplier in this economy is:
2
5
4
10
Assume the MPC is 2/3. If investment spending increases by $2 billion, the level of GDP will increase by:
$3 billion.
$2/3 billion.
$6 billion.
$2 billion.
Other things equal, a decrease in the real interest rate will:
shift the investment demand curve to the right.
shift the investment demand curve to the right.
move the economy upward along its existing investment demand curve.
move the economy downward along its existing investment demand curve.
Which of the following is mostly likely increase the real interest rate in Country Z?
Country Z’s central bank purchases government bonds
Country Z reduces government expenditures
Country Z is viewed as having increased political and economic risk
Country Z introduces a tax on consumption goods
If the MPC is .70 and gross investment increases by $3 billion, the equilibrium GDP will:
increase by $10 billion.
decrease by $4.29 billion.
increase by $2.10 billion.
increase by $4.29 billion.
If the MPC is .6, the multiplier will be:
4
6
2.5
1.67
