UNC Charlotte Pages



Name: __________________________ Date: _____________

|1. |The consumer price index reflects |

|A) |the changes in the prices of goods and services typically purchased by consumers. |

|B) |the average level of prices for intermediate goods and services purchased by business. |

|C) |the median price of a typical single family home. |

|D) |prices of all goods and services computed from the ratio of nominal GDP to real GDP. |

|2. |The sequence of a business cycle phases is |

|A) |peak, trough, expansion, recession. |

|B) |peak, expansion, trough, recession. |

|C) |peak, recession, trough, expansion. |

|D) |peak, expansion, recession, trough. |

|3. |An increase in real GDP from 2002 to 2006 necessarily indicates that |

|A) |people are better off in 2002 than they were in 2006. |

|B) |people are happier in 2006 than they were in 2002. |

|C) |prices increased between 2002 and 2006. |

|D) |quantities of goods and services produced increased between 2002 and 2006. |

|4. |All of the following are included in gross domestic income except |

|A) |wages. |

|B) |welfare payments. |

|C) |net interest. |

|D) |rental income. |

Use the following to answer question 5:

[pic]

|5. |Refer to Figure 5-1. The peak of the business cycle occurs |

|A) |between t1 and t3. |

|B) |at t3. |

|C) |between t2 and t3. |

|D) |at t2. |

|6. |Suppose that in Croy, residents never supply factors of production to foreign firms, while producers in Croy regularly employ |

| |factors owned by residents of other countries. Which of the following statements is true for Croy? |

|A) |GDP is greater than GNP. |

|B) |GDP is less than GNP. |

|C) |GDP and GNP are about the same. |

|D) |GDP exceeds GNP by an amount equal to depreciation plus indirect business taxes. |

|7. |In the U.S., since the 1950s, the share of employee benefits as a percentage of total employee compensation |

|A) |has been increasing. |

|B) |has been decreasing. |

|C) |has been relatively stable. |

|D) |has been subject to higher taxes. |

|8. |If your ticket wins the lottery, the earnings you receive |

|A) |causes gross domestic income to increase but does not affect gross domestic product. |

|B) |causes gross domestic income and gross domestic product to increase. |

|C) |causes gross domestic income to increase and gross domestic product to decrease. |

|D) |does not affect gross domestic income or gross domestic product. |

|9. |Which of the following reduces the duration of frictional unemployment? |

|A) |retraining unemployed workers to equip them with new skills |

|B) |subsidizing firms that are willing to train new entrants in the labor market |

|C) |establishing employment agencies which give out information about job vacancies |

|D) |establishing labor unions which will protect workers from being laid off. |

|10. |The income earned by those who supply entrepreneurial talent is called |

|A) |wages and salaries. |

|B) |profits. |

|C) |value of stock options. |

|D) |net interest. |

Use the following to answer question 11:

Figure 6-2

[pic]

|11. |Refer to Figure 6-2. Your father buys a new set of golf clubs from a U.S. firm. This transaction is part of |

|A) |personal consumption expenditures and the flow is represented by 1. |

|B) |personal consumption expenditures and the flow is represented by 5. |

|C) |private investment expenditure and the flow is represented by 1. |

|D) |private investment expenditure and the flow is represented by 5. |

|12. |Which of the following would tend to increase the natural rate of unemployment? |

|A) |an increase in the education level of the labor force |

|B) |more college graduates entering the labor force |

|C) |a higher rate of inflation |

|D) |lower unemployment benefit payments |

|13. |What does the phrase “jobless recovery” refer to? |

|A) |It refers to a recovery from a recession which does not produce strong growth in employment. |

|B) |It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and |

| |increase output at the same time. |

|C) |It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market|

| |and creating new jobs in foreign markets. |

|D) |It refers to a situation in which a worker's real wage falls despite increases in productivity. |

Use the following to answer question 14:

Table 5-5

|Year |Consumer Price Index |

|2001 |0.80 |

|2002 |1.00 |

|2003 |0.95 |

|2004 |1.25 |

|2005 |1.50 |

Table 5-5 shows some data on the consumer price Index for Kalimpong. The base year is 2002.

|14. |Refer to Table 5-5. Which of the following statements is true? |

| |I. |

| |Kalimpong experienced deflation in 2001. |

| | |

| |II. |

| |Kalimpong experienced deflation in 2003. |

| | |

| |III. |

| |The inflation rate fell between 2004 and 2005. |

| | |

|A) |I only |

|B) |I and II |

|C) |II only |

|D) |II and III |

|15. |The economy is booming. GDP is growing at a rate of 6% per year, well above the average growth rate. Under these circumstances, |

| |which of the following types of unemployment is likely to have a rate less than or equal to zero? |

| |I.. |

| |Frictional unemployment |

| | |

| |II. |

| |Cyclical unemployment |

| | |

| |III. |

| |Structural unemployment |

| | |

|A) |I only |

|B) |II only |

|C) |III only |

|D) |I, II, and II |

|16. |The value of a unit of money, such as the dollar, always varies |

|A) |directly with the price of gold. |

|B) |inversely with the price of gold. |

|C) |inversely with the average price of gold and silver. |

|D) |inversely with the average level of prices. |

|17. |GDP can be measured |

|A) |either in terms of the total value of output produced or as the total value of consumer expenditures on goods and |

| |services. |

|B) |either in terms of the total value of output produced or as the total value of income generated in producing that output.|

|C) |either in terms of the total value of income generated in producing a nation's output or as the total sales of a nation's|

| |output. |

|D) |either in terms of the total value of inputs used to produce a nation's output or as the cost of producing of that output|

| |excluding profit. |

|18. |Cyclical unemployment |

|A) |occurs even when an economy is producing at a point on its production possibilities frontier. |

|B) |occurs only during a recession. |

|C) |tend to occur when an economy experiences inflation. |

|D) |is a part of an economy's natural rate of unemployment. |

Use the following to answer question 19:

Table 6-2

| |billions of dollars |

|Personal consumption expenditures |500 |

|Gross private domestic investment |400 |

|Social Security payments to households |60 |

|Federal government purchases of goods and services |100 |

|State and local government purchases of goods |200 |

|Imports |180 |

|Net exports |–50 |

|19. |Refer to Table 6-2. What is the value of exports? |

|A) |$130 billion |

|B) |–$130 billion |

|C) |$230 billion |

|D) |–$230 billion |

|20. |Which of the following is not a consequence of deflation? |

|A) |Deflation causes uncertainty about the future. |

|B) |The threat of deflation can make people reluctant to borrow for long periods. |

|C) |Deflation causes the real value of money to fall. |

|D) |Firms may be reluctant to undertake investments for fear that the prices at which they can sell their output will drop. |

|21. |In the generation of GDP, pollution often occurs. As a result, |

|A) |the value of nominal GDP will always be greater than the value of real GDP. |

|B) |the value of real GDP will always be greater than the value of nominal GDP. |

|C) |GDP is not always a good measure of economic or social welfare. |

|D) |the value of GDP is underestimated. |

|22. |The purchases of U.S. products by citizens of Mexico are |

|A) |counted as U.S. exports. |

|B) |counted as U.S. imports. |

|C) |considered Mexico's exports. |

|D) |considered as an income transfer from the U.S. to Mexico. |

|23. |According to the Bureau of Labor Statistics, a person who is not working and is not looking for work is |

|A) |considered unemployed. |

|B) |considered underemployed. |

|C) |counted as a “not currently working” member of the labor force. |

|D) |not a member of the labor force. |

|24. |Potential output is |

|A) |the level of real GDP that exists when the economy is experiencing only cyclical and structural unemployment. |

|B) |the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded. |

|C) |the level of real GDP that exists when the actual rate of unemployment is zero. |

|D) |the level of real GDP that exists when the economy is experiencing only frictional and cyclical unemployment. |

|25. |The aggregate demand curve slopes downward |

| |I. |

| |for the same reasons that an ordinary demand curve does. |

| | |

| |II. |

| |in part because when the price level falls, the real wealth of the public falls, and this induces people to change their |

| |consumption. |

| | |

| |III. |

| |because as the price level falls, the net export component of aggregate demand increases. |

| | |

|A) |I, II, and III |

|B) |II and III |

|C) |II only |

|D) |III only |

|26. |Suppose an economy's exports increase and its imports decrease. All other things unchanged, this results in |

|A) |a decrease in net exports which will shift the aggregate demand curve to the right. |

|B) |an increase in net exports which will shift the aggregate demand curve to the right. |

|C) |a decrease in net exports which will shift the aggregate supply curve to the left. |

|D) |an increase in net exports which will shift the aggregate supply curve to the right. |

|27. |Suppose that an increase in government purchases of $100 million caused the aggregate demand curve to shift to the right by $350|

| |million at each price level. What is the value of the multiplier? |

|A) |2.5 |

|B) |3.5 |

|C) |0.285 |

|D) |$250 million |

|28. |The long-run aggregate supply curve is vertical at |

|A) |potential output. |

|B) |the actual level of real output. |

|C) |the actual level of nominal output. |

|D) |100% employment of the labor force. |

|29. |An economy adjust on its own to close a recessionary gap because there is |

|A) |pressure on nominal wages to fall and this shifts the SRAS curve rightward. |

|B) |pressure on nominal wages to rise and this shifts the SRAS curve rightward. |

|C) |pressure on nominal wages to fall and this shifts the SRAS curve leftward. |

|D) |pressure on nominal wages to rise and this shifts the SRAS curve leftward. |

|30. |In the short run, the equilibrium price level and the equilibrium level of total output are determined by the intersection of |

|A) |the aggregate demand, the short-run aggregate supply and the long-run aggregate supply curves. |

|B) |the short-run aggregate supply and the long-run aggregate supply curves. |

|C) |the aggregate demand and the short-run aggregate supply curves. |

|D) |the aggregate demand and the long-run aggregate supply curves. |

|31. |What do economists mean by the term “sticky wage”? |

|A) |It refers to the reluctance by employers to increase nominal wages during an inflationary period. |

|B) |It refers to a wage that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus in|

| |the labor market. |

|C) |It refers to a breakdown in wage negotiations between employers and employee unions. |

|D) |It refers to a union negotiated wage. |

|32. |How will a recession in the economies of our foreign trading partners affect U.S. aggregate demand? |

|A) |It will have no effect on our aggregate demand. |

|B) |U.S. aggregate demand will increase. |

|C) |U.S. aggregate demand will decrease. |

|D) |It depends on whether the U.S. offers financial aid to these countries. |

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download