1.

(02.01 MC) Which of the following statements explains the difference between final goods and intermediate goods with regards to the GDP? (2 points)

	Final goods are semi-finished goods used in the production of intermediate goods, while intermediate goods are used for consumption purposes, and both are included in the GDP.
	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, but only final goods are included in the GDP.
	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, and both are included in the GDP.
	Final goods are semi-finished goods used to produce intermediate goods, while intermediate goods are used for consumption purposes, but only intermediate goods are included in the GDP.
	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, but only intermediate goods are included in the GDP.

2.

(02.01 LC) How does a circular flow model illustrate GDP? (2 points)

	The circular flow model is a visualization of the economic transactions across the economy.
	The circular flow model shows only the factor payments received by households.
	The circular flow model represents the balance of payments of the government.
	The circular flow model is a visualization of economic transactions in foreign countries.
	The circular flow model represents the long-run equilibrium in an economy.

3.

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

Consumer spending	$18 trillion
Government spending	$6 trillion
Wages, business owner income, and corporate profits	$15 trillion
Exports	$3 trillion
Taxes	$3 trillion
Imports	$6 trillion
Interest payments on capital loans	$3 trillion
Business investment	$5 trillion

What would the country above's gross domestic product be for the year? (2 points)

	$23 trillion
	$26 trillion
	$29 trillion
	$39 trillion
	$59 trillion

4.

(02.02 MC) Which of the following would be counted as part of GDP, as calculated by the expenditures approach? (2 points)

	Medical advice offered by a doctor to a relative
	An increase in leisure time due to a technological breakthrough
	Informal economic transactions using only cash
	Money spent by a business on new production equipment
	The profits shared by stockholders of a major company

5.

(02.02 MC) Nominal GDP fails to take account of ________, and real GDP still does not measure ________. (2 points)

	changes in business inventories; household consumption
	inflation; non-market transactions
	exports; imports
	imports; government spending on infrastructure
	capital investments; goods produced in the country and sold overseas

6.

(02.03 HC) The Bureau of Labor Statistics takes a survey and reports the following unemployment data:

Number of Workers Classified as Employed	180 million
Number of Workers Cyclically Unemployed	9 million
Number of Workers Frictionally Unemployed	4 million
Number of Workers Structurally Unemployed	7 million
Working-age Population	300 million

Based on this data, what is the unemployment rate for the economy? (2 points)

	10 percent
	16.7 percent
	40 percent
	60 percent
	90 percent

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) Assume that Jonathan was laid off by his company due to recession and stopped looking for work a few weeks later due to health reasons. Which of the following is true in this scenario? (2 points)

	Jonathan was initially cyclically unemployed, but he is later considered a marginally attached worker.
	Jonathan was initially cyclically unemployed, but he is later considered a frictionally unemployed worker.
	Jonathan was initially structurally unemployed, but he is later considered a marginally attached worker.
	Jonathan was initially frictionally unemployed, but he is later considered a marginally attached worker.
	Jonathan was initially frictionally unemployed, but he is later considered a cyclically unemployed worker.

10.

(02.03 MC) An economy's natural unemployment rate is 9 percent, its structural unemployment rate is 2 percent, and its cyclical unemployment rate is 3 percent. Based on this data, its frictional unemployment rate is ________, and its actual unemployment rate is ________. (2 points)

	6 percent; 9 percent
	7 percent; 9 percent
	12 percent; 7 percent
	9 percent; 12 percent
	7 percent; 12 percent

11.

(02.03 MC) Under which scenario will the actual rate of unemployment be higher than the natural rate of unemployment? (2 points)

	Recession in the business cycle
	Replacement of human labor by machinery
	Aggregate demand in the economy increases
	Decrease in skilled workers
	Fewer workers seeking better paying jobs

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 CPI will be ________ when there is ________ in the quality of a good and its price remains the same. (2 points)

	understated; decline
	overstated; no change
	overstated; decline
	overstated; improvement
	understated; no change

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) Which of the following categories are the losers of a higher than expected increase in the price level? (2 points)

	Debtors, creditors, and savers
	Creditors and savers
	Debtors and creditors
	Savers only
	Debtors and savers

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) If the GDP deflator increases from 100 in the base year, to 125 five years later, to 150 the following year, what was the rate of inflation for from year 5 to year 6? (2 points)

	10 percent
	16.7 percent
	20 percent
	25 percent
	50 percent

20.

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

Year	Real GDP	GDP Deflator
2019	$50,000	400
2020	$40,000	200

What is the change in the nominal GDP from 2019 to 2020? (2 points)

	The nominal GDP has increased by $120,000.
	The nominal GDP has increased by $100,000.
	The nominal GDP has decreased by $120,000.
	The nominal GDP has remained constant.
	The nominal GDP has decreased by $100,000.

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.