WorksheetsMacro Unit 2 Review
Total questions: 59
Worksheet time: 44mins
In a Circular Flow Model of the Economy
Households produce goods & services & consume resources.
Households use resources, firms are sources of savings.
Households supply resources & consume goods & services.
Firms supply resources & consume goods & services.
A lender will benefit from inflation if
the actual inflation rate is higher than the anticipated inflation rate
the actual inflation rate is lower than the anticipated inflation rate.
The official unemployment rate is not an accurate indicator of actual unemployment because
full employment is greater than the natural unemployment
the employment rate is less than natural unemployment
the official rate does not include persons who have given up looking for work
Which of the following unemployed persons represents frictional unemployment?
Martha, a full-time student on the school's soccer team.
Janice, an accounting graduate who is interviewing with an accounting firm.
Thomas, a customer service representative who was laid-off after his job was automated.
Which of the following would gain from unanticipated inflation?
Landlords who own apartments in cities with rent controls
Individuals who have fixed retirement incomes
Individuals whio have borrowed money at fixed interest rates.
Which of the following would be included in the calculation of a country's GDP?
The sale of corporate stocks
The purchase of new construction equipment
Social Security checks received by retirees
If your nominal wage increases from $10 to $12 per hour and at the same time the general price level increases by 10%, your real wage has
decreased by 10%
increased by 10%
decreased by 20%
increased by 20%
A country's real GDP is the annual value of all final goods and services that are
produced in that country, adjusted for changes in the price level
purchased in that country, adjusted for changes in the price level
produced in that country, expressed in current prices
GDP does NOT account for which of the following?
The value added by all firms in the economy
The depletion of natural resources
Wages, rent, profit, and interest payments
Gross private domestic investment includes which of the following?
National defense spending
Transfer payments
Changes in business inventories
GDP has been critized as a measure of well-being because it fails to take into account
the distribution of income
the value of services
the value of intermediate goods
The rate of change of the consumer price index (CPI) tends to overstate the actual inflation rate because
consumers require more income to buy goods whose prices have increased
consumers tend to substitute lower-priced goods that may not be represented in the basket of goods
the basket of goods in the base year is frequently updated with new products
If a nation's real GDP is less than potential real GDP, what must be true?
The economy is in expansion
There is no cyclical unemployment
The actual rate of unemployment exceeds the natural rate of unemployment
Gross Domestic Product
Prices increasing at slower rates.
Workers that are able and willing to work and actively looking for a job but aren’t working.
Parts that go into the production of the final good.
The dollar value of all goods and services produced within a country’s borders in a given year.
All the spending on final goods and services produced in a given year.
Expenditure Approach
Prices increasing at slower rates.
Workers that are able and willing to work and actively looking for a job but aren’t working.
Parts that go into the production of the final good.
The dollar value of all goods and services produced within a country’s borders in a given year.
All the spending on final goods and services produced in a given year.
Disinflation
Prices increasing at slower rates.
Workers that are able and willing to work and actively looking for a job but aren’t working.
Parts that go into the production of the final good.
The dollar value of all goods and services produced within a country’s borders in a given year.
All the spending on final goods and services produced in a given year.
Unemployment
Prices increasing at slower rates.
Workers that are able and willing to work and actively looking for a job but aren’t working.
Parts that go into the production of the final good.
The dollar value of all goods and services produced within a country’s borders in a given year.
All the spending on final goods and services produced in a given year.
Frictional Unemployment
Unemployment caused from a recession.
Temporary unemployment or being between jobs but have transferable skills.
Frictional plus structural unemployment. Unemployment that exists when the economy is healthy and growing.
People who are no longer looking for a job because they have given up.
Changes in the labor force make some skills obsolete and job loss is permanent.
Structural Unemployment
Unemployment caused from a recession.
Temporary unemployment or being between jobs but have transferable skills.
Frictional plus structural unemployment. Unemployment that exists when the economy is healthy and growing.
People who are no longer looking for a job because they have given up.
Changes in the labor force make some skills obsolete and job loss is permanent.
Cyclical Unemployment
Unemployment caused from a recession.
Temporary unemployment or being between jobs but have transferable skills.
Frictional plus structural unemployment. Unemployment that exists when the economy is healthy and growing.
People who are no longer looking for a job because they have given up.
Changes in the labor force make some skills obsolete and job loss is permanent.
Natural Rate of Unemployment
Unemployment caused from a recession.
Temporary unemployment or being between jobs but have transferable skills.
Frictional plus structural unemployment. Unemployment that exists when the economy is healthy and growing.
People who are no longer looking for a job because they have given up.
Changes in the labor force make some skills obsolete and job loss is permanent.
Discouraged Workers
Unemployment caused from a recession.
Temporary unemployment or being between jobs but have transferable skills.
Frictional plus structural unemployment. Unemployment that exists when the economy is healthy and growing.
People who are no longer looking for a job because they have given up.
Changes in the labor force make some skills obsolete and job loss is permanent.
Peak
Someone who wants more hours but can’t get them but is still considered employed.
Period of economic downturn when output and employment are falling.
The point at which a recession begins to improve and move into a period of recovery.
Period of economic upturn when output and employment are rising.
The point at which a recovery period slows down and begins to move into a recession.
Trough
Someone who wants more hours but can’t get them but is still considered employed.
Period of economic downturn when output and employment are falling.
The point at which a recession begins to improve and move into a period of recovery.
Period of economic upturn when output and employment are rising.
The point at which a recovery period slows down and begins to move into a recession.
Expansion
Someone who wants more hours but can’t get them but is still considered employed.
Period of economic downturn when output and employment are falling.
The point at which a recession begins to improve and move into a period of recovery.
Period of economic upturn when output and employment are rising.
The point at which a recovery period slows down and begins to move into a recession.
Contraction
Someone who wants more hours but can’t get them but is still considered employed.
Period of economic downturn when output and employment are falling.
The point at which a recession begins to improve and move into a period of recovery.
Period of economic upturn when output and employment are rising.
The point at which a recovery period slows down and begins to move into a recession.
Underemployed
Someone who wants more hours but can’t get them but is still considered employed.
Period of economic downturn when output and employment are falling.
The point at which a recession begins to improve and move into a period of recovery.
Period of economic upturn when output and employment are rising.
The point at which a recovery period slows down and begins to move into a recession.
In a typical circular flow model describing the interaction of businesses and households, which of the following is/are true?
I. Households buy factors of production and goods
II. Firms buy factors of production and goods
III. Households buy factors of production
IV. Firms buy factors of production
V. Firms buy goods
VI. Households buy goods
Calculate Country X’s nominal gross domestic product (GDP) for 2017 using the expenditures approach.
14 billion dollars
18 billion dollars
19 billion dollars
Which of the following is true about gross domestic product
Calculations of GDP include the sale of used goods.
Calculations of GDP do not include the monetary value of production activities involving negative environmental side effects such as pollution.
Calculations of GDP include the unsold inventories of goods produced within the borders of the country.
Which of the following is classified as a discouraged worker?
Peter earned a degree in business and is actively seeking a job in the financial sector.
Ella has been unable to find a job and abandoned her job search.
Max decided to be a stay-at-home dad after he lost his job.
What type of unemployment describes the situation of factory workers displaced by automation?
Frictional
Cyclical
Structural
Given the labor market data above, what are the labor-force participation rate (LFPR) and the unemployment rate (UR) ?
The LFPR is 60% and the UR is 6.0%.
The LFPR is 60% and the UR is 10.0%.
The LFPR is 60% and the UR is 3.3%.
Suppose the consumer price index (CPI) was 100 on January 1st, 2017 and 110 on January 1st, 2018 with no changes in nominal wages. Which of the following is definitely true about the economy between January of 2017 and January of 2018?
The inflation rate was 10 percent.
The inflation rate was −10 percent.
Real wages increased by 10 percent.
Labor unions negotiated a 3-year contract with employers in the automobile industry. They agreed to a 3 percent per year increase in pay over the 3 years. How would each group be affected by an actual inflation rate of 4% next year?
Workers would be better off, and the employers would be worse off.
Workers would be worse off, and the employers would be unaffected.
Workers would be worse off, and the employers would be better off.
Which of the following describes a difference between nominal gross domestic product (nGDP) and real GDP (rGDP)?
Nominal GDP uses constant prices to measure the value of final output, while real GDP uses current prices.
Nominal GDP uses current prices to measure the value of final output, while real GDP uses constant prices.
Nominal GDP takes into account the size of the population while real GDP does not.
Suppose Miguel wants to know the value of real gross domestic product (GDP) for 2011 in terms of the base year 1984 dollars. In 1984 nominal GDP was $10 billion. In 2011 nominal GDP was $15 billion and the price deflator was 200. Real GDP in 2011 (expressed in 1984 dollars) would be equal to which of the following?
$5 billion
$10 billion
$7.5 billion
On the Business Cycle, the output gap is measured by which of the following?
The difference between nominal and real GDP.
The difference between actual and potential GDP.
The difference between the actual rate of unemployment and the natural rate of unemployment.
The economy of Fisherland is at full employment for which year in the above diagram?
2009
2013
2015
2017
Use the information for a hypothetical economy presented in the following table to answer the question. How many people are unemployed?
10,000
20,000
30,000
100,000
110,000
Use the information for a hypothetical economy presented in the following table to answer the following: what is the unemployment rate?
70%
50%
20%
10%
5%
A person who moved to a new state and took two months to find a new job experienced which type of unemployment?
Frictional
Structural
Cyclical
Natural
None of the above
What type of unemployment is created by a recession
Frictional
Structural
Cyclical
Natural
None of the above
Choose all that apply
Which of the following are characteristics associated with letter E?
Rising unemployment
Rising employment
Highest levels of unemployment
Economic growth
Inflation
The Consumer Price Index (CPI) measures___________.
inflation
GDP
unemployment
