1.) Angus the sheep farmer sells wool to Barney the knitter for $20. Barney makes two sweaters each of which has the market price of $40. Collette buys one of them while the other remains on the shelf of Barney's store to be sold later. What is the GDP here?

a.$8

b.$40

c.$60

d.$100

2.) Which of the following does NOT add to US GDP?

a.Air Franc buys a plane from Boeing, the US aircraft manufacturer

b.General Motor builds a new factory in South Carolina

c.The city of NY pays salary to a policeman

d.The Federal Government sends a Social Security check to your grandfather

3.) An American buys a pair of shoes made in Italy. How do the US national income account treat this transaction?

a.Net exports and GDP both rise.

b.Net Exports and GDP both fall.

c.Net Export fall, while GDP is unchanged.

d.Net Exports are unchanged, while GDP rises

4.) The CPI measures approximately the same economic phenomenon as

a.Unemployment Rate

b.GDP Deflator (GDPd)

c.Real GDP (GDPr)

d.Nominal GDP (GDPn)

5.) If the CPI - 200 in 1980 and 300 today then $600 in 1980 has the same purchasing power as ______ today

a.$500

b.$400

c.$900

d.$700

6.) You deposit $2000 in a saving account and a year later you have $2100.Meanwhile the CPI rises from200 to 204. In this case, the nominal interest rate is --------- percent, and the real interest rate is-------------percent

a.1, 5

b.3, 5

c.5, 1

d.5, 3

7.) Because capital is subject to diminishing returns, higher saving and investment do not lead to higher

a.income in the long run

b.income in the short run

c.growth in the long run

d.growth in the short run

8.) Thomas Malthus believed that population growth would

a.Spread the capital stock too thinly across the labor force, lowering each worker's productivity

b.Put stress on the economy's ability to produce food, dooming humans to remain in poverty

c.Eventually decline to sustainable levels as birth control improved and people had smaller families.

d.Promote technological progress because there would be more scientists and inventors

9.) According to the theory of efficiency wage,

a.Right to work laws reduce the bargaining power of unions.

b.Firms may find it profitable to pay above the equilibrium wage

c.Sectoral shifts are the main source of frictional unemployment

d.An excess supply of labor puts downward pressure on wages

10.) In a competitive labor market, when the government increases the minimum wage the result is a(n)

_______in the quantity of labor supplied

_______in the quantity of labor demanded

a.Decrease, increase

b.Increase, increase

c.Decrease, decrease

d.Increase, decrease