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AP Macro Unit 2-GDP, Unemployment, Inflation Flashcards | StudBud
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AP Macro Unit 2-GDP, Unemployment, Inflation
AP Macro Unit 2-GDP, Unemployment, Inflation
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Unit II Measurement
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1
Which of the following are a flaw in how the CPI is calculated?
New Product Bias
Substitution Bias
All of the above
Product Improvement Bias
2
The population of working age is 200, the people with jobs 80, the people looking for jobs 40, people who gave up is 20.
the unemployment rate is 20 %
the unemployment rate is 50%
the unemployment rate is 15%
the unemployment rate is 33 %
3
Real GDP
distorts the price level in the GDP.
measures only intermediate goods.
is another term for GNP.
expresses GDP in constant prices.
4
What is a recession?
a long and severe depression
a very mild and short expansion
a period when real GDP falls for at least 6 months
when the economy is neither expanding nor contracting
5
An example of investment spending (I) would be:
purchase of a loaf of bread.
purchase of a bond.
purchase of a new productive machine.
purchase of stock in a foreign company.
6
If the CPI is 120 in Year 1 and 150 in Year 2, then the inflation rate for Year 1 to Year 2 is
20
25
10
50
7
This year, a market basket of goods cost $150 and in the base year the same goods cost $100
the CPI of this year is 150
the CPI this year is 175
the CPI this year is 166
the CPI this year is 100
8
If Consumption is $50B, Investment is $20B, Government Spending is $15B, Net Exports is -$5B, & Tax is $10B
GDP is $96B
GDP is $90B
GDP is $80B
GDP is $100B
9
The labor force is defined as:
the total of the population of working age.
the total of the persons employed and unemployed.
the total population.
the total persons employed.
10
To measure each citizen’s average share of the inflation-adjusted national output, we should
compute real GDP per capita
compute the rate of inflation.
compute the unemployment rate.
compute nominal GDP.
11
Which statement describes full employment or the NRU?
Everybody who wants a job has a job.
There is no structural unemployment.
There is no cyclical unemployment
There is no unemployment at all.
12
The part of a business cycle when real GDP stops falling is
expansion.
peak.
trough.
contraction.
13
Which of the following is included in GDP?
an intermediate good
a fish that you buy at a store
A service produced and used inanother country
a fish that you catch and eat yourself
14
If the current unemployment rate is 10%, & the natural rate is 6%, then the % over the natural rate is:
Frictional
Structural
Seasonal
Cyclical
15
To be counted as unemployed by the US Government, one must:
be out of work and not a full-time student.
have had a job before and be actively looking for work.
be out of work and be actively looking for a job.
have had a job previously.
16
Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%
then the real rate of interest is equal to: 10
then the real rate of interest is equal to: 3
then the real rate of interest is equal to: 4
then the real rate of interest is equal to: 7
17
If Nominal GDP is 500 and Real GDP is 400, the GDP Deflator is
1.25
12.5
80
125
18
Which theory says that inflation occurs when the demand for goods exceeds the existing supply?
demand-pull theory
supply-and-demand theory
cost-push theory
quantity theory
19
Unanticipated inflation:
helps lenders.
reduces the value of money.
harms borrowers.
increases the value of current wages.
20
Shoe-leather costs refer to the:
effect of inflation on clothing.
increased cost of transactions due to inflation.
effect of inflation on transportation costs.
high price of leather goods.
21
A general increase in prices is called
purchasing power.
the CPI.
inflation.
a price index
22
Gross domestic product or GDP is the total $ value of :
household income earned in a given time period.
government production in a given time period.
new final goods & serv. produced domestically in a year.
intermediate goods & services produced domestically per year
23
2004 is the Base Year. What is the Real GDP of 2005
460
130
260
300
24
The circular-flow illustrates how households __ goods & services and __ factors of production.
sell; buy
buy; sell
own; buy
buy; buy
25
An american software engineer's job is outsourced to India...they are
cyclically unemployed
frictionally unemployed
seasonally unemployed
structurally unemployed
