1. Gross Domestic Product is equivalent to the sum of:

A. Consumer spending, investment spending, government purchases, exports, and imports

B. Consumer spending, investment spending, government purchases, and exports

C. Consumer spending, consumption of fixed capital, government purchases and exports

D. Consumer spending, inventory spending, government purchases and net exports

E. Consumer spending, investment spending, government purchases and net exports

2. Which of the following would represent an addition to a nation's GDP?

A. Ms. Jones purchases a share of stock in a technology start-up company

B. An auto retailer purchases imported cars

C. The government hires workers to install streetlights

D. A business sells used watches

E. A mother prepares a home cooked meal for her family

3. If an American student purchases a personal computer made by a Korean owned company located in California, what would happen to consumption and the GDP of the USA as a result?

A. Increase / increase

B. Increase / decrease

C. No change / increase

D. Decrease / decrease

E. Decrease / increase

4. As a measure of economic welfare, GDP underestimates a country's production of goods and services when there is an increase in

A. The production of naval ships for the military

B. Household production

C. The production of solar panel devices

D. Legal protective services

E. Crime prevention services

5. A mechanic that leaves his job working on cars and is currently looking for a job working on planes is considered

A. Frictionally unemployed

B. Seasonally unemployed

C. Stucturally unemployed

D. Cyclically unemployed

E. Not in the Labor Force

6. The natural rate of unemployment

A. Is zero percent unemployment

B. Is when cyclical unemployment is less than frictional unemployment

C. Is the sum of frictional and structural unemployment

D. Results in higher cyclical unemployment

E. Can never decrease since it represents the optimal amount if unemployment

7. Which of the following is true regarding Gross Domestic Product (GDP)?

A. Intermediate goods are not counted because GDP does not include imports from foreign countries

B. Household production, like home auto repair, is counted in GDP

C. Transfer payments are not included in GDP because government expenditures are not counted

D. GDP includes the purchase and sale of all goods and services in a country in one year

E. GDP, adjusted for inflation, measures economic growth over time

8. When the government establishes a binding price floor on a good or service then there will be

A. An increase in demand for the good or service

B. A surplus because of the quantity demanded will decrease

C. A shortage because the quantity supplied will decrease

D. No incentive to place a tax on the good or service

E. A decrease in the price once the market adjusts

9. If the production possibilities curve is concave from the origin (or bowed out), then economists say that

A. Resources are scarce in the economy

B. Resources are not equally suited for the production of both goods

C. Economic growth is occurring in the economy

D. Resources are being inefficiently used in the economy

E. Resources are equally suited for the production of either good