1. Which statement isfalse?

A) Consumer spending is business income.

B) Business spending is consumer income.

C) If consumers and businesses both cut spending, everyone's incomes falls.

D) If consumers and businesses both cut spending, employment increases.

E) Falling wages decrease demand in output markets.

2. When nominal GDP is greater than real GDP it means

A) prices have risen since the year we use as a standard for constant prices.

B) the population has increased.

C) prices have fallen since the year we use as a standard for constant prices.

D) the population has decreased.

E) there is a mistake because nominal GDP can never be greater than real GDP.

3. Which event increases Canada's nominal GDP?

A) Andreas steals $200 worth of cosmetics from Shopper's Drug Mart.

B) The Middletons sell a Nova Scotia cottage that has been in the family for six generations.

C) Brad buys $240 of crack cocaine from Smokie Joe.

D) Ian buys a 2009 Honda Civic for $3,000.

E) A millionaire from Michigan buys $400 of fresh Ontario blueberries while on vacation in Canada.

4. Gerry grows marijuana plants from his own seeds in the forest behind his house. He sells 20 kilograms of plants to Smokey Joe for $4,000. Joe spends $200 on baggies for packaging, and resells the marijuana on the street for $6,000.Joe'svalue added is

A) $2,000.

B) $5,800.

C) $6,000.

D) $1,800.

E) $10,200.

5. Which shifts a macro production possibilities frontier inward?

A) rising input prices

B) falling input prices

C) rising output prices

D) falling output prices

E) none of the above

6. In 2015, Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruits were used exclusively for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $5 while a kilo of bananas sold for $10. In 2016, Adanac produced only 10 kilos of apples but produced 40 kilos of bananas. In 2016, prices were $6 per kilo of apples and $8 per kilo of bananas. Using 2015 prices, economists estimate that potential GDP is $400 in 2016. The output gap in 2016 is

A) - $50.

B) + $50.

C) - $100.

D) + $100.

E) - $120.

7.A country with an excellent and affordable system of government-financed health care probably has ________ real GDP and might have ________ well-being than other countries.

A) higher; higher

B) lower; lower

C) lower; higher

D) higher; lower

E) well-being does not depend on affordable health care

8. The neighboring countries of Portavilla and Ura have the same real GDP per person. In Portavilla, the richest 20 percent of the population earns 40 percent of the income, while the poorest 20 percent of the population earns 10 percent of the income. In Ura, the richest 20 percent of the population earns 80 percent of the income, and the poorest 20 percent of the population earns only 5 percent of the income. These statistics suggest that

A) income is distributed more equitably in Portavilla.

B) the richest 20 percent of the population in Portavilla earns more than the richest 20 percent of the population in Ura.

C) the poorest 20 percent of the population in Ura earn more than the richest 20 percent of the population in Portavilla.

D) the poorest 20 percent of the population in Portavilla earns more than the richest 20 percent of the population in Portavilla.

E) income is distributed more equitably in Ura.

9. A country has a working-age population of 30 million, with 18 million employed and 2 million unemployed. 2 million of the employed are working part-time, and half of these persons wish to work full-time. The unemployment rate is

A) 9.1 percent.

B) 10 percent.

C) 11.1 percent.

D) 14.3 percent.

E) 50 percent.

10. East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. The official unemployment rate is ________ percent.

A) 10

B) 11

C) 14

D) 9

E) 3