1. Suppose a person named Eunice quits his job to dedicate himself to traveling the country. Officially, he would now be classified as which of the following?

Group of answer choices

Unemployed

Not in the labor force

Neither unemployed nor employed but still in the labor force

Unclear

2. Consider a country called Martha-ville. If the actual GDP is $10,000,000 while the potential GDP is $10,000,000, the unemployment rate is 5% and inflation rate is 5%, what is the nominal interest rate predicted by the Taylor Rule?

1.5%

4%

8.5%

13%

3. What is total surplus?

Group of answer choices

The net benefit to buyers of a market

The net benefit to sellers of a market

The net benefit to society of a market

None of the above

4. If a country experiences very high inflation, the country's currency will no longer function as a unit of account, medium of exchange nor as a store of value.

Group of answer choices

True

False

5. How would we describe comparative advantage?

Group of answer choices

It describes how one country has a lower physical capital requirement for a specific good than another country's physical capital requirement

It describes how one country is more productive than another country in all goods

It describes how one country can produce a good with a higher explicit cost relative to another country

It describes how one country can produce a good with a lower opportunity cost relative to another country

6. What is total surplus?

Group of answer choices

The net benefit to buyers of a market

The net benefit to sellers of a market

The net benefit to society of a market

None of the above

7. Considering the US has a huge trade deficit ($617 billion in 2019), who has likely gained from having trade as opposed to international trade being banned (assuming trade protection is negligible)?

Group of answer choices

Consumers

Producers

Government

Producers and the Government

8. Suppose the US is exporting corn. What can we say is true for the domestic market for corn?

Group of answer choices

World price is above the domestic equilibrium price

Total surplus is lower with trade than if trade was banned

Less is produced domestically with trade than if trade was banned

Producer surplus is lower with trade than if trade was banned

9. Suppose we have the following information for the country of "Melanie-opolis":

Unemployed = 10.6 million

Employed = 139.4 million

We have the following table for the unemployment rates that correspond to the different amounts of real GDP:

Real GDP Total Unemp. Rate Structural Unemp. Rate Frictional Unemp. Rate

$19.2 trillion 15% 3% 1%

$21.6 trillion 10% 3% 1.5%

$24 trillion 5% 3% 2%

What is the potential GDP?

Group of answer choices

$19.2 trillion

$24 trillion

$28 trillion

Not enough information

10. For the previous problem, how much real GDP is lost if the number of unemployed is 10.6 million?

Group of answer choices

$0.64 trillion

$1 trillion

$1.44 trillion

$1.73 trillion

11. Suppose a country is initially in a long run equilibrium, but there is a huge decrease in consumption. Relative to the long run equilibrium, what can we say about the unemployment and the price level in terms of the short run effect?

Group of answer choices

Unemployment is lower and the price level is lower

Unemployment is lower and the price level is higher

Unemployment is higher and the price level is lower

Unemployment is higher and the price level is higher

12. Suppose the US economy is already in its long run equilibrium. The Federal Reserve then decides to increase the money supply. Using the AD-AS model, what will be the long run effect?

Group of answer choices

Price level rises and output is unchanged

Price level rises and output rises

Price level falls and output falls

Price level falls and output rises