____ 1. GDP may be defined as the market value of:
A. economic resources used in the production of annual output in
B. all American owned goods and services produced in a
C. all final goods and services produced in an economy in a given
D. national income distributed to producers, consumers, and
____ 2. Net exports is a positive number when:
A. gross private domestic investment is greater than depreciation.
B. depreciation is greater than gross private domestic investment.
C. a nationís imports of goods and services exceeds its exports.
D. a nationís exports of goods and services exceeds its imports.
____ 3. The CPI:
A. includes more goods than the GDP price index.
B. attempts to measure changes in the price of all goods and
services produced by the US economy.
C. attempts to measure changes in the prices of all factors of
D. includes fewer goods than the GDP price index.
____ 4. Nominal GDP has risen more rapidly than real GDP since World
War II in the US because:
A. the general price level has increased.
B. the general price level has declined.
C. productivity has increased substantially.
D. world trade has increased.
____ 5. The GDP tends to understate the amount of economic activity in
the US because it excludes:
A. expenditures for new automobiles.
B. the unpaid work performed by homemakers.
C. the professional athleteís salaries.
D. expenditures for health care services.
____ 6. In which industry or sector of the economy is output least likely to be affected by the business cycle?
A. agricultural commodities
B. capital goods production
C. housing construction
D. automobile construction
____ 7. White-collar unemployment rates compared to blue-collar
unemployment rates are:
A. higher, because white-collar workers tend to be more expensive.
B. lower, because white-collar workers tend to be harder to replace due to their training and specialization.
C. lower in the winter, higher in the summer
D. just about the same.
____ 8. The GDP gap measures the amount by which:
A. nominal GDP exceeds real GDP.
B. potential GDP exceeds actual GDP.
C. actual GDP exceeds potential GDP.
D. actual GDP exceeds national income.
____ 9. Inflation that occurs when total spending is greater than the economyís ability to produce output at the existing price level is:
A. anticipated inflation.
B. cost-push inflation.
C. demand-pull inflation.
D. unanticipated inflation.
____ 10. Unanticipated inflation tends to penalize:
A. individuals who borrow money form financial institutions.
B. people who save money in financial institutions.
C. 15 yards.
D. governments which have a progressive personal income tax.
____ 11. Classical macroeconomists believe that:
A. demand is always greater than supply.
B. supply is always greater that demand.
C. wages and prices are inflexible.
D. wages and prices are flexible.
Answers: 1.C 2.D 3.D 4.A 5.B 6.A 7.B 8.B 9.C 10. B
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