Randy Goodwin Test 1

An example of an intermediate good would be

a) a new car

b) a used car

c) a new tire for a used car

d) a tire for a new car

e) All of the above

d) a tire for a new car

Which of the following transactions would be included in GDP for 1999?

a) On January 5, 1999, Chris Carter sold 100 shares of stock in IBM Corporation.

b) Bonita Delgado purchases a new 1999 Oldsmobile on March 10, 1999

c) Nadav Daniel buys a used desk from the "Struggling Students Used Furniture" store on May 9, 1999.

d) Levi Lathan purchases a 75-year-old penthouse on Lake Shore Drive in Chicago, Illinois on June 23, 1999.

b) Bonita Delgado purchases a new 1999 Oldsmobile on March 10, 1999

The clearest sign of a recession is

a) an increase in nominal GDP

b) a decrease in the level of real GDP

c) a decrease in the level of Nominal GDP

d) an increase in nominal GDP

b) a decrease in the level of real GDP

One major effect of the Great Depression was

a) it reaffirmed everyone's faith that capitalism was a self-correcting system.

b) it encouraged voters to limit the role of gov't

c) the creation of the rational expectations school of economic theory

d) a decreased faith in the ability of economies to automatically correct major problems

d) a decreased faith in the ability of economies to automatically correct major problems

If the current dollar GDP increases from $10,000,000 one year to $15,000,000 four years later, which of the following cannot have happened?

a) output has increased and the price level has increased

b) output has increased by 50% and the price level has not changed

c) the price level has increased by 60% output has fallen

d) the price level and output have each increased by 50%

d) the price level and output have each increased by 50%

Dissatisfaction with public school education has led many parents to try home schooling for their children. If parents cut back on their jobs outside the home in order to spend time teaching their children at home, how will this affect GDP?

a) GDP will increase

b) Real GDP will increase and nominal GDP will decrease

c) Both real and nominal GDP will increase

d) GDP will decrease

d) GDP will decrease

When inflation occurs

a) real wages must necessarily fall

b) real wages must necessarily rise

c) workers will experience falling real incomes

d) worker's real income may rise or fall

d) worker's real income may rise or fall

Which of the following would tend to increase the value of officially measured GDP?

a) decriminalization of drugs such as marijuana and cocaine

b) decriminalization of prostitution

c) decriminalization of gambling on basketball and football

d) all of the above

d) all of the above

Deflation refers to a decline in the

a) price level

b) rate of inflation

c) total income

d) real GDP

a) price level

A good produced in 1998 and held in inventory until it is sold in 1999 would be included in which measure of GDP?

a) 1999 GDP

b) both 1998 and 1999 GDP

c) 1998 GDP

d) half the value in 1998 and half the value in 1999

c) 1998 GDP

A real estate salesperson sells a house in 1999 that was built in 1990. How does this transaction get counted in the GDP statistics?

a) the price of the house and the real estate salesperson's commission are both included in the 1999's GDP

b) neither the price of the house or the commissions is included in the 1999's GDP

c) the real estate salesperson's commission but not the price of the house is included in 1999's GDP

d) the price of the house would be included in both 1990's GDP and the GDP for 1999

c) the real estate salesperson's commission but not the price of the house is included in 1999's GDP

Mitsubishi Corporation of America builds a car in Normal, Illinois and ships it to Japan for sale. In which country's GDP is this production included?

a) Japan

b) both Japan and the US

c) in Japan as retail value and the US as wholesale value

d) half the value in Japan and half in the US

e) the US

e) the US

Which of the following scenarios best illustrated the concept of cyclical unemployment?

a) Grace loses her job because of new automated machinery

b) Sean quits his job to look for work that is more fun

c) Ellen quits looking for work because she doesn't think she can find a suitable job

d) Marian loses her job because of a recession

d) Marian loses her job because of a recession

The use of automated teller machines (ATMs) has caused some bank tellers to lose their jobs. This an example of

a) cyclical unemployment

b) frictional unemployment

c) seasonal unemployment

d) structural unemployment

d) structural unemployment

If the discouraged workers were included in the labor force,

a) unemployment rate would fall

b) the labor force would decrease

c) the employment rate would rise

d) the unemployment rate would rise

d) the unemployment rate would rise

Full employment is defined by most economist as the minimization of

a) cyclical unemployment

b) frictional unemployment

c) seasonal unemployment

d) structural unemployment

a) cyclical unemployment

Which of the following examples of production goods and services would be included in U.S GDP?

a) Samantha, a Canadian citizen, grows sweet corn in Minnesota and sells it to a grocery store in Canada

b) Ian, an American citizen, grows peaches for his family in the back yard of their Atlanta home

c) Leo, an American citizen, grows marijuana in his Seattle home and sells it to his friends and neighbors

d) Harvey, a Canadian citizens, work in a U.S owned auto assembly plant in Toronto

a) Samantha, a Canadian citizen, grows sweet corn in Minnesota and sells it to a grocery store in Canada

People who have done any work for pay for profit during the Bureau of Labor Statistics employment survey week are considered:

a) employed

b) unemployed

c) part of the labor force

d) discouraged workers

e) both a and c

e) both a and c

Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

a) caused measured GDP to fall

b) not caused any change in measured GDP

c) caused measured GDP to rise

d) probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted

e) caused measured nominal GDP to fall, but real GDP remains constant

c) caused measured GDP to rise

The price index was a 320 in one year and 360 in the next year. What was the inflation rate?

a) 9%

b) 11.1%

c) 12.5%

d) 20%

e) 40%

c) 12.5%

In the base year, the CPI is always

a) -1

b) 0

c) 1

d) 10

e) 100

e) 100

Consider a small economy in which consumers buy only two goods: apples and pears. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that

a) the number of apples bought by the typical consumer is equal to the number pears bought by the typical consumer in each year

b) neither the number of apples nor the number of pears bought by the typical consumer changes from year to year.

c) the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year

d) neither the price of apple nor the price of pears changes from year to year

e) the number of apples and the number of pears bought by the typical consumer changes by the same amount from year to year

b) neither the number of apples nor the number of pears bought by the typical consumer changes from year to year.

A recession has traditionally been defined as a period during which

a) nominal GDP declines for two consecutive quarters

b) nominal GDP declines for four consecutive quarters

c) real GDP declines for two consecutive quarters

d) real GDP declines for four consecutive quarters

e) real GDP declines

c) real GDP declines for two consecutive quarters

The inflation rate is the,

a) absolute change in real GDP from one period to another

b) percentage change in real GDP from one period to another

c) absolute change in the price level from one period to another

d) percentage change in the price level from one period to another

e) total change in the price level from one period to another

d) percentage change in the price level from one period to another

Changes in nominal GDP reflect

a) only changes in price

b) only changes in the amounts being produced

c) both changes in prices and changes in the amounts being produced

d) neither changes in prices nor changes in the amounts being produced

e) changes in prices minus changes in amounts being produced

c) both changes in prices and changes in the amounts being produced

Changes in real GDP reflect

a) only changes in prices

b) only changes in the amounts being produced

c) both changes in prices and changes in the amounts being produced

d) neither changes in prices nor changes in the amounts being produced

e) changes in prices divided by the changes in amounts

b) only changes in the amounts being produced

Which of the following statements about nominal GDP and real GDP is correct?

a) Nominal GDP is a better gauge of economic well-being than is real GDP

b) Real GDP is a better gauge of economic well-being than is nominal GDP

c) Real GDP and nominal GDP are equally good measures of economic well-being

d) Nominal GDP reflects the economy's ability to satisfy people's needs and desires, but real GDP does not

e) Nominal GDP is a better gauge of economic well-being and real GDP is a better gauge of production

b) Real GDP is a better gauge of economic well-being than is nominal GDP

When the overall levels of prices in the economy is increasing, the economists say that the economy is experiencing

a) economic growth

b) stagflation

c) inflation

d) deflation

e) recession

c) inflation

Suppose that the natural unemployment rate is 6.5%. If actual unemployment is 8%

a) frictional unemployment is 6.5%

b) structural unemployment is 1.5%

c) cyclical unemployment is 1.5%

d) structural plus frictional unemployment is 8%

c) cyclical unemployment is 1.5%

Businesses fail, people change jobs, and some people are fired. All of this economic activity in the economy naturally leads to

a) frictional unemployment

b) structural unemployment

c) cyclical unemployment

d) a natural rate of unemployment

a) frictional unemployment

According to the Bureau of Labor Statistics, a husband who chooses to stay home and take care of the household is

a) unemployed

b) employed

c) not in the labor force

d) a discouraged worker

c) not in the labor force

An accountant with a CPA designation that has been unable to find work for so long that she has stopped looking for work is considered to be

a) employed

b) unemployed

c) not in the labor force

d) not in the adult population

c) not in the labor force

The amount of unemployment that the economy normally experiences is known as

a) efficiency wage unemployment

b) frictional unemployment

c) cyclical unemployment

d) the natural rate of unemployment

d) the natural rate of unemployment