1.

(02.01 MC) Which of the following is true for the gross domestic product? (2 points)

	It includes the value of both final and intermediate domestic goods.
	It is the market value of goods produced in a foreign country.
	It includes net exports of the domestic country.
	It is only measured by adding up the total expenditures in an economy.
	It includes the value of intermediate goods.

2.

(02.01 LC) Which of the following is true regarding the circular flow model used to explain the GDP? (2 points)

	There is a flow of factors of production from households to firms, and of goods from firms to households, in the factor market.
	There is a flow of goods from households to firms, and of goods from firms to households, in the factor market.
	There is flow of factors of production from households to firms, and of factor payments from firms to households, in the factor market.
	There is flow of expenditure from households to firms, and of factor payments from firms to households, in the product market.
	There is flow of factors of production from households to firms, and of factor payments from firms to households, in the product market.

3.

(02.01 HC) Use the table to answer the question that follows.

Wages received by employees	$15 trillion
Bonuses received by employees	$6 trillion
Rent on land	$12 trillion
Dividends earned by stockholders	$8 trillion
Profits earned by firms	$19 trillion
Interest received on capital	$7 trillion
Net income from abroad	$13 trillion

Calculate the GDP of the country according to the income approach. (2 points)

	The GDP of the country is $80 trillion.
	The GDP of the country is $67 trillion.
	The GDP of the country is $65 trillion.
	The GDP of the country is $61 trillion.
	The GDP of the country is $59 trillion.

4.

(02.02 MC) Assume that a country has a high GDP and also one of the worst life expectancy rates in the world. Which limitation of the GDP is highlighted in this scenario? (2 points)

	The GDP does not measure household contributions.
	The GDP does not include sale of illegal contraband.
	The GDP does not include government aid.
	The GDP does not include net receipts from abroad.
	The GDP does not measure standard of living.

5.

(02.02 MC) The GDP does not include ________ because they are considered to be ________. (2 points)

	illegal sales; non-market transactions
	net exports; non-domestic goods
	private investment; remittance from abroad
	transfer payments; economic transactions
	household production; intermediate goods

6.

(02.03 HC) From the following data given by the Bureau of Labor Statistics, calculate the total number of persons who are counted in a labor force of a country. (2 points)

Institutionalized population	5 million
Stay-at-home parents	12 million
Employed individuals	22 million
Unemployed individuals	9 million
Military workers	7 million
Under age 16 population	13 million
Retired individuals	11 million

	31 million
	22 million
	36 million
	42 million
	68 million

7.

(02.03 HC) What is the percentage of the unemployed population in the labor force? (2 points)

Individuals not seeking work	13 million
Individuals out of work because of automation	7 million
Individuals in between jobs	12 million
Individuals laid off due to recession	11 million
Individuals working full time	60 million
Individuals who are self employed	10 million
Individuals who are retired	2 million

	30%
	32%
	35%
	26%
	28%

8.

(02.03 MC) Which of the following is true about the limitations of the unemployment rate? (2 points)

	The unemployment rate is often overestimated because it includes part-time workers.
	The unemployment rate is often overestimated because it includes discouraged workers.
	The unemployment rate is often underestimated because it excludes retired workers.
	The unemployment rate is often underestimated because it excludes inefficient workers.
	The unemployment rate is often underestimated because it excludes part-time workers.

9.

(02.03 LC) Michaela was recently fired from her factory job because her company's inventories have sharply increased for six consecutive months. Michaela is most likely (2 points)

	a marginally attached worker
	a discouraged worker
	frictionally unemployed
	structurally unemployed
	cyclically unemployed

10.

(02.03 MC) An economy's structural unemployment rate is 2 percent, its frictional unemployment rate is 4 percent, and its cyclical unemployment rate is 3 percent. Based on this data, its natural unemployment rate is ________ and its actual unemployment rate is ________. (2 points)

	5 percent; 6 percent
	6 percent; 9 percent
	7 percent; 9 percent
	9 percent; 7 percent
	9 percent; 6 percent

11.

(02.03 MC) Which of the following would explain an increase in the natural rate of unemployment? (2 points)

	Increasing education level of the population
	Decreasing technical skills of employees
	Increase in wages
	Decreasing restrictions on production
	Decrease in a recessionary gap

12.

(02.04 MC) A consumer price index going from 140 in year 1 to 130 in year 2 means the economy is experiencing (2 points)

	depression
	deflation
	inflation
	recession
	stagflation

13.

(02.04 MC) If the consumer price index for a given year is 120 and the price of the fixed basket of goods for that year is $60, what must the price of the basket have been in the base year? (2 points)

	$30
	$50
	$72
	$120
	Indeterminate

14.

(02.04 HC) Assume that only two goods are produced in an economy, A and B. In the base year, 6 units of A are produced at a price of $3 and 5 units of B are produced at a price of $2. And in the given year, 6 units of A are produced at a price of $2 and 5 units of B are produced at a price of $6. What is the CPI for the given year? (2 points)

	150
	66.67
	52.83
	178
	120

15.

(02.04 LC) The consumer price index tends to ________ the substitution of lower-priced goods, which has the effect of ________ inflation. (2 points)

	underrepresent; overstating
	underrepresent; understating
	overrepresent; overstating
	overrepresent; understating
	ignore; understating

16.

(02.05 LC) Assume that the inflation rate in an economy is expected to be 3% but turns out to be -1% instead. Which of the following statements about the economy is true? (2 points)

	There is a decrease in the price level because of an unexpected deflation in the economy.
	There is a decrease in the price level because of unexpected inflation in the economy.
	There is an increase in the price level because of an unexpected deflation in the economy.
	There is an increase in the price level because of unexpected inflation in the economy.
	The price level remains constant because of an unexpected deflation in the economy.

17.

(02.05 MC) If a bank offers a home loan with a fixed interest rate of 8 percent with an expected inflation rate of 4 percent. If the inflation rate ends up being 5 percent, which accurately describes the impact on the bank? (2 points)

	It benefited because the real interest rate increased by 1 percent.
	It benefited because the real interest rate increased by 4 percent.
	It lost financially because the real rate of interest decreased by 1 percent.
	Its expected gains increased because the real rate of interest increased to 9 percent.
	The bank's real interest rate was not impacted by the difference in the inflation rate.

18.

(02.06 MC) Use the data table to answer the question that follows.

Year	Nominal GDP	GDP Deflator
1	$640 billion	160
2	$1050 billion	175

By how much did the value of output, adjusted for inflation, change from Year 1 to Year 2? (2 points)

	$200 billion
	$410 billion
	$179 billion
	$400 billion
	$600 billion

19.

(02.06 MC) Assume that in an economy, the value of the total output at current prices is $450 billion when the GDP Deflator is 150 for Year 1, and in Year 2, it is $675 billion when the GDP Deflator is 225. Which of the following statements is true in this scenario? (2 points)

	The value of the total output adjusted for inflation has increased by $225 billion in year 2.
	The value of the total output adjusted for inflation has increased by $300 billion in year 2.
	The value of the total output adjusted for inflation has decreased by $225 billion in year 2.
	The value of the total output adjusted for inflation has remained the same in year 2.
	There is insufficient data to determine the value of the total output adjusted for inflation in year 2.

20.

(02.06 MC) Use the data table to answer the question that follows.

Year	Price ($)	Quantity (units)
2015	120	200
2016	150	150

Using 2015 as the base year, calculate real GDP for the years 2015 and 2016. (2 points)

	The real GDP for 2015 and 2016 are $22,500 and $18,500, respectively.
	The real GDP for 2015 and 2016 are $24,000 and $18,000, respectively.
	The real GDP for 2015 and 2016 are $20,000 and $18,000, respectively.
	The real GDP for 2015 and 2016 are $30,000 and $20,500, respectively.
	The real GDP for 2015 and 2016 are $21,500 and $30,500, respectively.

21.

(02.06 MC) For country XYZ, a study shows that the nominal GDP was $2,400 billion, whereas the real GDP was less than the nominal GDP because of the GDP deflator that was standing at 120. Considering this, what was the value of real GDP? (2 points)

	$4,800 billion
	$3,600 billion
	$1,200 billion
	$2,000 billion
	$2,400 billion

22.

(02.07 LC) Which of the following is true if the economy is producing above the full employment level? (2 points)

	There is a recessionary output gap, and the actual unemployment is more than the natural unemployment level.
	There is an inflationary output gap, and the actual unemployment is more than the natural unemployment level.
	There is an inflationary output gap, and the actual unemployment is less than the natural unemployment level.
	There is a recessionary output gap, and the actual unemployment is less than the natural unemployment level.
	There is no output gap, and the economy has grown in terms of its potential level of output in the long run.

23.