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WorksheetsReview Unit 1-2
Total questions: 69
Worksheet time: 1hrs 1mins
All societies face a trade-off for every decision for which of the following reasons?
Resources are not allocated efficiently
Resources are scarce
A decision entails zero opportunity cost
Some resources are always unused
The concept of opportunity cost would no longer be relevant if
all current incomes were invested in technological research
resources were allocated effectively
poverty in an economy no longer existed
the supply of all resources was unlimited
What measure shows how well the economy is doing over time?
Gross Domestic Product
Unemployment Rate
Inflation Rate
Which of the following is NOT included in a country's GDP?
Consumer Spending
Business Spending
Government Spending
Net Exports
Net Imports
What measure shows what percentage of the eligible workers do not have jobs?
Gross Domestic Product
Unemployment Rate
Inflation Rate
When people can't find a job because of a lack of demand for their skills or type of labor, this is called?
Frictional Unemployment
Structural Unemployment
Cyclical Unemployment
When people can't find a job because the economy is not doing well due to a recession, this is called?
Frictional Unemployment
Structural Unemployment
Cyclical Unemployment
A decrease in the general price level of goods in services that can be negative in the long run by driving down the GDP and raising unemployment.
Inflation
Deflation
An increase in costs will
Shift aggregate demand
Shift aggregate supply
Inflation:
Always reduces the cost of living
Reduces the purchasing power of a pound
If people are unemployed because of a fall in aggregate demand this is known as:
Cyclical unemployment
Frictional unemployment
CPI measures
the value of GDP in base year values
prices of raw materials purchased by firms
prices of imports, but not exports
prices of a basket of goods purchased by consumers
If inflation is higher than expected then
borrowers win
lenders win
everybody wins
everybody loses
Leakage from circular flow would be
Exports
Taxes
Government Spending
Imports
Frictional unemployment
worker replaced by robots
worker voluntarily quits to look for a better job
worker laid off because of downturn in business
worker switches from part time to full time
On the PPC which point would represent a recession?
on the curve
inside the curve
outside the curve
indeterminate
In calculating GDP of that sector, we know that the total value added of that sector is .......
$3.5
$10.0
$15.5
$31.0
Daffa buys stock $1,000. He has to pay $50 for broker fee. How much can be counted in GDP?
$1000 (only the stock)
$1050 (stock + broker fee)
$0 (neither stock nor broker fee)
$50 (only the broker fee)
Which of these following example can be counted in GDP?
Your grandmother wins $10 million in the lottery
Company A takeover by purchasing all the assets of Company B
Buy mozzarella cheese to store it as restaurant's inventory
You buy a used copy of this textbook
Please calculate Nominal GDP in 2017...
$6.7
$5.1
$8.4
No answers are correct
How much Deflator GDP in 2018?
100
123.45
125.37
127.35
Please calculate economic growth from the data above!
37.13%
33.17%
30.37%
31.37%
Which one is considered to be business fixed investment?
Build a new house
Increase stock in warehouse
Build a new factory plant
Buy a sharia mutual fund
In a circular flow of income in a closed economy with government intervention, leakage consists of _________________.
Investment and savings
Savings only
Savings and taxes
Savings, taxes and imports
This refers to the purchase of goods and services by individuals or households.
Investment
Export
Import
Consumption
In the circular flow of income, government spending and exports are ___.
injections and leakages, respectively.
leakage and injections, respectively.
components of aggregate supply
injections
Who among the following would be considered as unemployed?
A graduating student of legal age to work
An entrepreneur in the process of starting a new business
A secretary who has resigned from work & looking at job ads
A housewife running 2 internet shops at the same time
Which of these is NOT a characteristic of an unemployed person?
He/she does not work
He/she has made specific efforts to find a job
He/she is laid off from a job in the succeeding months
He/she is undergoing a career change
Full employment GDP is...
output where the Natural Rate of Unemployment is achieved
Output without cyclical unemployment
output where there is non-accelerating inflation
All of the above
If the price of imported Canadian lumber increases
AS shifts left (decrease)
AS shifts right (increase)
AD shifts left (decrease)
AD shifts right (increase)
take the number of unemployed people in the country divided by the number of people in the labor force and multiplying the quotient by 100.
unemployment rate
unemployment growth
employment rate
value of current gross domestic product adjusted for inflation
GDP
real GDP
inflation
Classical economists (Smith)
In the circular flow diagram, which of the following is true?
Businesses pay wages, rent, interest, and profits to households in return for use of factors of production.
Businesses purchase goods and services from households in return for money payments.
Households pay wages, rent, interest, and profits to businesses in return for use of factors of production.
The relationship between households and businesses exist only in a traditional society.
The relationship between households and businesses exists only in command economy.
In which way does a straight-line production possibilities curve differ from a concave production possibilities curve?
A straight-line production possibilities curve has a decreasing opportunity cost.
A straight-line production possibilities curve has a constant opportunity cost.
A straight-line production possibilities curve has an increasing opportunity cost.
A straight-line production possibilities curve does not show opportunity cost
Upward-sloping production possibilities curve.
What can cause a production possibilities curve to move to the right?
thousands of people move out of the country
a drought destroys many crops
new technology
the population is growing increasingly old
Which of the following would cause a leftward shift of the production possibilities curve?
An increase in unemployment
An increase in inflation
An increase in capital equipment
A decrease in consumer demand
A decrease in the population
The dollar value of all final goods and services produced within a country's borders in one year. Most important measure of economic growth
Gross Domestic Product
GDP Per Capita
Real GDP
Nominal GDP
GDP divided by the population. It identifies on average how many products each person makes. Best measure of standard of living.
GDP Per Capita
Income Approach
Labor Force Participation Rate
Problems with the CPI
Who is hurt by unanticipated inflation?
-Lenders (people who lend money at fixed interest rates)
-People with fixed incomes
-Savers
-Borrowers (people who borrow money)
-A business where the price of the product increases faster than the price of resources
-Above 16 years
-Able/willing to work
-Not institutionalized (jail/hospital)
-Not in military, in school full time, or retired
What are the criticisms of the unemployment rate?
Discouraged workers: some people are no longer looking for a job because they have given up.
Underemployed workers: Someone who wants more hours but can't get them is still considered employed
Percent of population in the labor force. If people leave the labor force, the unemployment rate falls.
Index numbers assigned to each year that show how prices have changed relative to a specific base year (base year given 100)
Unemployment caused by a recession. As demand for goods/services falls, demand for labor falls and workers are fired
How do you calculate the unemployment rate?
Percent of people unemployed(# unemployed)/(# in labor force) x 100
Frictional + structural unemployment
% change in prices = (year 2 - year 1)/(year 1) x 100
Who is in the labor force?
-Above 16 years; -Able/willing to work
All of these are correct.
-Not institutionalized (jail/hospital)
-Not in military, in school full time, or retired
Why is zero percent unemployment not our goal?
Because people will always be between jobs or replaced by technology
The amount of employment that exists when the economy is healthy and growing
If people leave the labor force, the unemployment rate falls
some people are no longer looking for a job because they have given up
Problems with the CPI
Substitution bias
New products
Product quality
All of these are correct
How do you calculate the inflation rate?
% change in prices = (year 2 - year 1)/(year 1) x 100
Frictional + structural unemployment
(# unemployed)/(# in labor force) x 100
C + I + G + Xn
1. Promote economic growth
2. Limit unemployment
3. Keep prices stable (limit inflation)
Major Economic Goals for Every Country
factors of productivity
components of GDP
Income approach adds up
The government hires contractors to build and pave highways. Is this included in GDP within the expenditures model?
YES
NO
What could cause the shift from D1 to D2?
A change in preferences
A change in price
A change in quantity demanded
A change in quantity supplied
Which of the following is an expansion, or recovery?
A
B
C
D
If GDP falls for at least two quarters, it is considered what stage of the business cycle?
Expansion
Recession
Prosperity
Recovery
If a news headline says, "Finally!!! 2 straight months of increased jobs."
Where on the business cycle is the current economy?
Peak
Contraction
Trough
Expansion
