1. Macro Review Session
According to expenditure model GDP accounting, money income derived from this year’s output is equal to:
1. corporate profits
2. the amount spent to purchase this year’s total output
3. Ig- depreciation
4. Wages and interest

2. 2. GDP provides an indication of the value society places on the relative worth of goods and services because it:
A. provides an estimated value of used goods sales
B. gives increase weight to security transactions
C. is an estimate of income received
D. is a monetary measure

3. 3. The sale of an auto in 2016 produced in 2015 would not be included in GDP for To do so would involve:
A. including a nonmarket transaction
B. including a nonproduction transaction
C. including a noninvestment transaction
D. public transfer payments

4. 4. Which of these is considered an investment (ie
4. Which of these is considered an investment (ie. Part of GDP) by economists?
A. the purchase of shares of Microsoft corporation
B. the construction of a new computer factory in the US
C. the resale of stock originally issued by GM Corp
D. the sale of a department store building from Macy’s to Dillards

5. 5. If Ig is greater than depreciation, the economy will most likely be:
A. static
B. expanding
C. declining
D. having inflation

6. 6. GDP in an economy is $3452 billion
6. GDP in an economy is $3452 billion. C=$2342 billion, G=$865 billion, and Ig =$379 billion. Net exports are equal to:
A. $93 billion
B. $123 billion
C. -$45 billion
D. -$135 billion

7. 7. GDP is defined as:
A. personal consumption and gross private investement
B. the sum of wages, corporate profits, and interest income
C. the market value of final goods and services produced with in a country in a calendar year
D. the market value of all final and intermediate goods produced by an economy in a calendar year

8. 8. If both nominal GDP and price level are rising, it is evident that:
A. real GDP is constant
B. real GDP is rising but not as rapidly as price level
C. real GDP is declining
D. no conclusion can be drawn concerning real GDP based on this information

9. 9. Suppose nominal GDP rose from $500 to $600 while the GDP price index increased from to 150. The real GDP:
A. remained constant
B. increased
C. decreased
D. cannot be calculated with the data given

10. 10. In an economy total expenditure for a market basket of goods in year 1 (the base year) was $4000 billion. In year 2, the total expenditure for the same market basket of goods was $ billion. What was the GDP price index for the economy in year 2?
A. .88
B. 1.13
C. 188
D. 113

11. 11. Nominal GDP is less than real GDP in an economy in year 1
11. Nominal GDP is less than real GDP in an economy in year 1. In year 2 nominal GDP is equal to real GDP. In year 3 nominal GDP is slightly greater than real GDP. In year 4 nominal GDP is significantly greater than real GDP. Which year is most likely to be the base year being used to calculate the price index?
A. 1
B. 2
C. 3
D. 4

12. 12. Nominal GDP was $3774 in year 1 and the price index was 108; nominal GDP was $3989 in year 2 and the price index was 112. What was real GDP in year 1 and 2, respectively?
A. $3494 and $3562
B. $3339 and $3695
C. $3595 and $3725
D. $3643 and $3854

13. 13. A price index one year was 145, and the next year is was 167
13. A price index one year was 145, and the next year is was 167. What is the approximate % change in price level from one year to the next as measured by that index?
A. 12%
B. 13%
C. 14%
D. 15%

14. 14. Which of the following is one of the 4 phases of the business cycle?
A. inflation
B. recession
C. unemployment
D. hyperinflation

15. 15. Production and employment would be LEAST affected by a severe depression in which type of industry?
A. nondurable consumer goods
B. durable consumer goods
C. capital goods
D. labor goods

16. 16. Unemployment in a country is 8%
16. Unemployment in a country is 8%. The total population of the country is 250 million, and the size of the civilian labor force is 150 million. The number of employed workers in this economy is:
A. 12 million
B. 20 million
C. 138 million
D. 140 million

17. 17. A worker who loses a job at a refinery because consumers and firms are switching to solar power is an example of:
A. frictional unemployment
B. structural unemployment
C. seasonal unemployment
D. cyclical unemployment

18. 18. A worker who has quit a job and is taking two weeks off before reporting to a new job is an example of:
A. frictional unemployment
B. choice unemployment
C. cyclical unemployment
D. disguised unemployment

19. 19. Insufficient total spending in the economy results in:
A. frictional unemployment
B. structural unemployment
C. underemployment
D. cyclical unemployment

20. 20. Full employment unemployment in an economy has been achieved when:
A. frictional unemployment is zero
B. structural unemployment is zero
C. cyclical unemployment is zero
D. the natural rate of unemployment is zero

21. 21. The labor force includes those who are:
A. less than 16 years old
B. institutionalized
C. not seeking work
D. employed or looking for employment

22. 22. Okun’s law predicts that when the actual unemployment rate exceeds the natural rate of unemployment by two percentage points, the GDP gap will equal:
A. 2% of potential
B. 3% of potential
C. 4% of potential
D. 5% of potential

23. 23. If the GDP gap were equal to 6% of potential GDP, the actual unemployment rate would exceed the natural rate of unemployment by:
A. two percentage points
B. three percentage points
C. four percentage points
D. five percentage points

24. 24. If the CPI was 110 in one year and 117 in the next year, the rate of inflation from one year to the next would be:
A. 3.5%
B. 4.7%
C. 6.4%
D. 7.1%

25. 25. In which range does the price level begin to rise as the economy approaches full employment?
A. range 1
B. range 2
C. range 3
D. range 4

26. 26. Only two resources, capital and labor, are used in an economy to produce an output of million units. If the total cost of capital resources is $150 million and the total cost of labor resources is $50 million, then the per unit production costs of each unit in this economy are:
A. $.67
B. $1.50
C. $2.00
D. $3.00

27. 27. If your income increases by 8% and the price level increases by 10%, then your real income:
A. increases by 2%
B. increases by 18%
C. decreases by 18%
D. decreases by 2%

28. 28. If an economy can supply no more resources to production, an increase in aggregate spending(demand) will cause:
A. output and prices to increase
B. output and employment to increase
C. output to decrease and price level to increase
D. nominal income and price level to increase

29. 30. If average nominal income is $21,000 and the price level index is 154, the average real income would be about:
A. $12546
B. $13636
C. $15299
D. $17823

30. 31. With no inflation a bank would be willing to lend $10 million at an annual interest rate of 8%. But, if the rate of inflation was anticipated to be 6%, the bank would charge what annual interest rate to lend the money?
A. 2%
B. 6%
C. 8%
D. 14%

31. 32. Who would be hurt by “unanticipated” inflation?
A. those living on incomes with cost of living adjustments
B. those who find prices rising less rapidly than their nominal incomes
C. those who lent money at a fixed rate
D. those who became debtors when price level was lower

32. 33. Which of these contributes to cost push inflation?
A. an increase in employment and output
B. an increase in per unit production costs
C. a decrease in resource prices
D. an increase in unemployment

33. 34. If an economy is experiencing a depression with substantial unemployment, an increase in total spending(demand) will cause: a. a decrease in the real income of the country b. Little or no increase in the price level c. An increase in the real income and a decrease in the nominal income of the country d. Proportionate increases in output and price level.

34. 35. The price of a good has doubled in 14 years
35. The price of a good has doubled in 14 years. The approximate annual average percentage increase in the price level over this period has been:
A. 2%
B. 3%
C. 4%
D. 5%

35. 35. The burden of unemployment is LEAST felt by which of the following:
A. teenagers
B. women
C. minority workers
D. white collar workers