2nd Macroeconomics Exam – Destin Economics

The 2nd. Macroeconomics Exam covers National Income Accounting (GDP), Unemployment, Inflation, and Business Cycles. These are our primary measures of the economy and its ability to provide for economic welfare and growth. As with the he 1st. Macroeconomics Exam Quizzes, the first Quiz is easiest and Quizzes 2 and 3 are progressively more difficult. If you do well on all three Quizzes, you should be ready for the real thing. Good luck!

174

2nd Macroeconomics Exam (EASY)

1 / 25

Imagine that you withdrew $100 from your checking account. Imagine, also, that you used that money to buy a new pair of shoes. How did the withdrawal of the $100 and the purchase of the shoes affect GDP

The withdrawal of the $100 reduced GDP and the purchase of new shoes increased GDP.

The withdrawal of the $100 had no effect on GDP and the purchase of new shoes increased GDP.

The withdrawal of the $100 increased GDP and the purchase of new shoes increased GDP.

The withdrawal of the $100 had no effect on GDP and the purchase of new shoes had no effect on GDP.

2 / 25

Intermediate goods are not used in the calculation of GDP because:

Their value is counted as part of the value of the final good for which they are an input.

Their value generally adds costs, but not benefit to other goods.

They were produced in the year prior to when they are used as inputs.

They play a minimal role in the production of the goods that are counted as part of GDP.

3 / 25

Deflation is said to occur when the average level of prices of goods and services _________.

Decreases

Increases

Reaches equilibrium

Recesses

4 / 25

Unemployment that requires workers to seek additional education or training in order to acquire relevant job skills is known as

Structural unemployment.

Frictional unemployment.

Cyclical unemployment.

Seasonal unemployment.

5 / 25

Income measured in current dollars is known as:

Real income.

Adjusted income.

Nominal income.

None of the above.

Nominal income is based in current dollars—not adjusted for inflation.

6 / 25

Of the following, which is directly included in the calculation of GDP?

The sale of a brand new iPhone to a college student.

The sale of sugar to a bakery.

The sale of land to a farmer.

The sale of lumber to a home builder.

7 / 25

A decrease in the average price level of goods and services is

Deceleration.

Deflation.

Inclusionary.

Inflation.

Deflation is a drop in the average level of prices of goods and services.

8 / 25

Of the following, which is an example of an intermediate good?

The potatoes used to make potato chips.

The labor of a teenager mowing his grandparent’s lawn.

The french fries purchased for lunch today.

All of the above.

9 / 25

If an economy produces 1,000 bottles of wine that sell for $15 each and 5,000 loaves of bread that sell for $1 each, how much do wine and bread contribute to that country’s GDP?

15000

16000

19000

20000

10 / 25

Inflation is defined as:

An increase in the prices of all goods and services.

An increase in the prices of a majority goods and services.

An increase in the general price level.

An increase in the average level of prices of inputs.

11 / 25

The percentage of the noninstitutionalized working-age population that is either employed or seeking work is known as the

Labor stock rate.

Unemployment rate.

Human capital rate.

Labor participation rate.

12 / 25

The definition of the labor force is:

The number of people who are classified as either employed or unemployed.

The number of people who are of working age (16-65).

The number of people who are between the agers of 16 and 65 and are not unemployed.

The number of people in jobs.

13 / 25

Income measured in current dollars is known as:

Real income.

Adjusted income.

Nominal income.

None of the above.

Nominal income is based in current dollars—not adjusted for inflation.

14 / 25

In order to be classified as unemployed a person must be

Recently laid off or fired.

Recently laid off or fired from a full-time job.

At least 16, without a job, and actively seeking employment.

None of the above.

15 / 25

The labor force is defined as

All who are currently employed.

All who are at least 16 years old and are currently employed or unemployed.

All who are at least 16 years old and are currently employed.

All who are at least 16 years old and are currently employed or unemployed or are discouraged workers.

16 / 25

Of the following, which would be an example of a final good?

Tires purchased by Tesla to be installed on their cars.

Tires you purchased for installation on your car.

A used watch purchased on eBay.

A used Tesla.

17 / 25

PPI is an index used to measure changes in the prices faced by

Consumers.

Producers.

Government.

All of the above

18 / 25

Unemployment that occurs when workers lack the abilities and skills needed by employers isknown as

Structural unemployment.

Frictional unemployment.

Cyclical unemployment.

Seasonal unemployment.

19 / 25

The duration of unemployment will likely increase when

An economic slump increases in duration.

An economic downturn is relatively short and shallow.

The unemployment rate rises and then falls quickly.

The unemployment rate remains low for extended periods of time.

20 / 25

Unemployment that occurs when workers are between jobs searching for appropriate job offers is known as

Structural unemployment.

Frictional unemployment.

Cyclical unemployment.

Seasonal unemployment.

21 / 25

Changes in real GDP are best used to measure

Business cycles.

Changes in the exchange rate of the dollar.

The unemployment rate.

Inflation.

22 / 25

Cycles of economic expansion and contraction in real GDP are known as the

State of equilibrium.

Business cycle.

Macro variance.

Cycle of Determinism.

23 / 25

Real income is

Identical to non-nominal income.

Identical to nominal income.

A measure of inflation in input markets.

A measure of the purchasing power of nominal income.

Real income is nominal income that has been adjusted for inflation.

24 / 25

A town has a population of 10,000 and 5,000 people are in the labor force. If 4,500 people are employed, the unemployment rate would be

10%

15%

There is insufficient data to make this calculation.

25 / 25

The Consumer Price Index attempts to measure

Changes in the average price of the goods and services purchased by the typical family.

Changes in the average price of all goods and services.

The effects of price changes on the prices of common stocks.

The impact of consumer purchases on the prices of the goods and services they purchase.

Your score is

133

2nd. Macroeconomics Exam

2nd Macroeconomics Exam (MODERATE)

The 2nd. Macroeconomics Exam covers National Income Accounting (GDP), Unemployment, Inflation, and Business Cycles. These are our primary measures of the economy and its ability to provide for economic welfare and growth. As with the he 1st. Macroeconomics Exam Quizzes, the first Quiz is easiest and Quizzes 2 and 3 are progressively more difficult. This Quiz is Moderately difficult. If you do well on all three Quizzes, you should be ready for the real thing. Good luck!

1 / 25

Of the following, which is most likely to bring an end to a recession?

Increases in business and consumer optimism about the future.

Increases in inflation and unemployment

Increases in interest rates.

Increasing numbers of discouraged workers leaving the workforce.

2 / 25

Of the following, which is a likely to be a result of inflation?

Increased saving.

Increased regulation.

Increased speculation.

None of the above.

3 / 25

The ideal time for businesses to make new investments is

Shortly after a recession ends and demand is beginning to increase.

Shortly before a recession begins and demand is at its peak.

Midway through a recession while markets are calm.

Business investments always pay off, regardless of their timing.

4 / 25

When the economy is beginning its recovery from a recession, inflation is generally not an immediate concern because

Higher prices have already been ‘priced in’ to the economy.

There is usually ‘slack’ (idle resources) in the economy at that point.

Inflation is desirable because it is probably what ended the recession.

All of the above are possible.

5 / 25

Cyclical unemployment occurs when

Workers’ skills and abilities don’t match those needed by employers.

Workers take time to choose among job offers.

Output falls below the full employment level.

All of the above.

6 / 25

The purchasing power of money is _______ by inflation.

decreased.

Increased.

Unaffected.

Projected.

7 / 25

In the classical model, market-driven economies

Can’t last without government intervention.

Thrive on instability.

Adjust to market fluctuations without government intervention.

Never vary from long-term trend.

Because prices and output readily adjust, classical theory de-emphasizes government intervention into the economy.

8 / 25

Of the following, which is characteristic of a downturn in the business cycle?

A falling unemployment rate.

A lower level of real output.

An increase in inflation.

All of the above.

9 / 25

Of the following, which transaction would be included in the official calculation of GDP?

You borrow $100 from your parents for textbooks.

You loan $20 to your brother for his new business venture.

You give $20 to the local food bank.

You buy a new pair of shoes.

10 / 25

Of the following, which is included as a part of investment spending in the calculation of GDP?

Spending on parts and ingredients.

Spending on transfer payments.

Spending on stocks and bonds.

Spending on new factories.

11 / 25

If the economy continues to expand after a recession, we generally expect to see the

possibility of inflation rising and the unemployment rate falling.

possibility of inflation rising and the unemployment rate rising.

possibility of inflation falling and the unemployment rate falling.

possibility of inflation falling and the unemployment rate rising.

12 / 25

Money illusion is defined as

The use of nominal dollars rather than real dollars to gauge one’s standard of living.

The use of real dollars rather than nominal dollars to gauge one’s standard of living.

The impression that many people have that inflation is always rising faster than incomes.

The belief that prices are stable even though inflation is rising.

13 / 25

In a recession, we generally see

inflation rising and the unemployment rate falling.

inflation falling and the unemployment rate rising.

inflation falling and the unemployment rate falling.

inflation rising and the unemployment rate rising.

14 / 25

We say that CPI “controls for inflation.” This is another way of saying that CPI

CPI assumes caveat emptor.

CPI assumes ceteris paribus.

Is computed using base year prices.

Is computed using a controlled degree of inflation.

15 / 25

The term “business cycle” refers to

Seasonal changes in business profitability.

Periods of growth and decline in Real GDP.

The way many businesses ‘cycle through’ their employees.

All of the above.

16 / 25

Of the following, which event(s) would most likely cause the business cycle to peak and begin to trend negative?

Business increase investments as profits rise.

Business increase investments as interest rates rise.

Consumers decrease spending as tax rates are cut.

consumers decrease spending as real incomes fall.

17 / 25

Of the following, which is not a final good or service?

A computer purchased by an attorney.

Sugar purchased by a bakery.

A computer purchased by a member of the local school board.

Sugar purchased by a wealthy homeowner.

18 / 25

Of the following, which will be true if a country’s GDP grows faster than its population over a period of time?

Real GDP has decreased.

All citizens of that country have seen their incomes rise.

That country’s per capita GDP has increased.

Inflation is inevitable.

19 / 25

If the labor force participation rate increases

The unemployment rate must increase.

The unemployment rate must decrease.

The unemployment rate is unaffected.

The unemployment rate could either increase or decrease.

20 / 25

Structural unemployment occurs when

Workers take time to choose among job offers.

Workers’ skills and abilities don’t match those needed by employers.

Output falls below the full employment level.

All of the above.

21 / 25

The problem with speculation initiated as a reaction to periods of inflation is that it can lead to all of the following except

An inward movement from the Production Possibilities Curve

Speculative investments in goods that may go up in price rather than investments in productive assets.

Investments in gold, silver, and other hard assets instead of capital for production.

Increasing investment in technology and other productive assets.

22 / 25

Of the following, which statement is true about GDP per capita

It allows for the comparison of output between different time periods.

It is calculated by dividing a country’s real GDP by its population.

It is a better measure of a country’s output in times of inflation.

All of the above are true.

23 / 25

Frictional unemployment is due to

Workers taking time to update their job skills.

The time workers take to find new jobs.

Workers returning to the job market after an injury or sickness.

All of the above are potential sources of frictional unemployment.

24 / 25

The best index to use when computing the real income of a household is the

GDP Deflator.

Producer Price Index.

Consumer Price Index.

Cost of Living Adjustment (COLA).

25 / 25

In a recession

Real GDP declines for at least two consecutive quarters.

Purchases of durable goods generally decline.

The unemployment rate rises

All of the above are likely.

Your score is

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