1.If the price index moves from 107 to 112, the rate of inflation is:

• A. 4.7%
• B. 2.8%
• C. 3%
• D. 5%

2. At the beginning of 2016 the CPI was 210.2. At the end of 2016 it was 213.1. What was the rate of inflation in 2016?

• A. 3.6 percent.
• B. 4.1 percent.
• C. 2.9 percent.
• D. 1.4 percent.

3. Which of the following is an intermediate good?

• A. The purchase of tires by an individual for a car that he is about to sell.
• B. The unreported baby sitting services of a teenager.
• C. The purchase of a computer by a college student for use in studying.
• D. The purchase of a radio by an automobile manufacturer.

4. Government purchases are defined as:

• A. purchases of new goods and services and transfer payments by federal, state, and local governments.
• B. purchases of new goods and services and transfer payments by the federal government.
• C. purchases of new goods and services by federal, state, and local governments.
• D. purchases of goods and services by the federal government.

5. The CPI is a measure of:

• A. the price of all goods and services included in GDP.
• B. the price of consumer goods and services.
• C. the price of final goods sold by producers.
• D. the price of raw materials and intermediate goods.

6. An increase in the income of consumers will cause the

• A. supply of all goods to rise
• B. the demand for some goods to rise and for others to fall
• C. demand for all goods to rise
• D. supply of all goods to fall

7. Improvements in technology tend to

• A. increase supply
• B. lower the cost of producing a given output
• C. Increase the output produced for a given cost
• D. all of the above

8. If a good is inferior and income decreases then

• A. the supply curve will shift to the left
• B. the supply curve will shift to the right
• C. the demand curve will shift to the left
• D. the demand curve will shift to the right

9. In the case of a surplus,

• A. there is no market adjustment because buyers can purchase what they want.
• B. the quantity supplied exceeds the quantity demanded at the current price level.
• C. the quantity demanded exceeds the quantity supplied at the current price level.
• D. market price will rise.

10. In the circular flow diagram, the market where households provide firms with labor is called the ________ market.

• A. product
• B. resource
• C. manufacturing
• D. supply

11. Which of the following is a normative statement?

• A. The best tool for ending a recession is an active fiscal policy.
• B. Trade makes it possible to increase the production of all goods at once.
• C. Macroeconomics is the study of the national economy as a whole.
• D. College students often enjoy economics classes.

12. The production possibilities frontier (PPF) shows

• A. the trade-off between the efficient production of two different goods.
• B. the difference between microanalysis and macroanalysis.
• C. the difference between normative and positive analysis.
• D. how a firm should price a new product.

13. Which of the following is a positive statement?

• A. The Internet is the greatest invention of the twentieth century.
• B. Everyone should work in a bank to understand the true value of money.
• C. Everyone should attend college.
• D. The unemployment rate is 3.5%.