ANSWER MULTIPLE CHOICE QUESTIONS:

1. Which of the following represents the single largest expenditure component of GDP?

a. Personal consumption expenditures.

b. Gross private investment.

c. Net exports of goods and services.

d. Government consumption expenditures and gross investment.

2. A company produced 10 dishwasher machines in 1998. The company sold

8 in 1998 and added 2 to its inventories. The market value of the

dishwasher machines in 1998 was $200 per unit. What is the value of this

company's output that will be included in the 1998 GDP?

a. $1,600

b. $400

c. $2,000

d. $1,800

3. If the price index is greater than 100, then

a. nominal GDP is greater than real GDP.

b. nominal GDP is lower than real GDP.

c. nominal GDP equals real GDP.

d. prices decreased by more than double between the current and the base years.

4. GDP is nota perfect measure of social welfare and the society's economic well-being because

a. it does not say anything about the distribution of income.

b. GDP accounting rules do not adjust for production that causes negative externalities.

c. it does not include all economic activities in the economy.

d. All of the above

5. Refer to Table 6.1. The value of gross private domestic investment in

billions of dollars is:

a. 430.

b. 450.

c. 335.

d. 680.

$ Billions

Durable goods 400

Nonresidential investment 300

Federal purchases of goods 250

Exports 550

State and local purchases of goods 250

Residential investment 50

Services 650

Imports 150

Change in business inventories -15

Nondurable goods 500

Table 6.1

6. Refer to Table 6.1. Personal consumption expenditures in billions of dollars are

a. 1650.

b. 1150.

c. 1300.

d. 1550.

7. Refer to Table 6.1. The value of government spending in billions of dollars is

a. -150 b. 500 c.-300 d.-500

8. Refer to Table 6.1. The value of net exports in billions of dollars is

a. -150 b. 400 c.-300 d.-400

9. Refer to Table 6.1. The value of gross domestic product in billions of dollars is

a. 1855.

b. 2785.

c. 2405.

d. 2355.

10. Refer to Table 6.1. The share of personal consumption expenditures (C) in

GDP is approximately:

a. 55%.

b. 65%.

c. 70%.

d. 75%.

11. Nominal GDP is gross domestic product measured

a. in the prices of a base year.

b. in current dollars.

c. at a constant output level but at the base-year prices.

d. as the difference between the current year's GDP and last year's GDP.

12. Which of the following is not one of the primary expenditure categories of GDP?

a. Personal consumption expenditures.

b. Gross private investment.

c. Net exports of goods and services.

d. Profits.

13. Refer to the Table below. Thegrowth rateof realGDPfrom year 2010

to year 2011 is approximately _______. (Please note that GDP is quoted in

billions of dollars.)

Year	GDPin current $	GDPin constant $
2010	14,964.4	14,783.8
2011	15,517.9	15,020.6

a. 1.6%

b. 237 billions of $.

c. 3.6%.

d. 553 billions of $.

14. Where do employment and unemployment statistics come from?

1. The Current Population Survey.
2. The U.S. population Census.
3. People filing claims for Unemployment Insurance benefits.
4. Contacting and counting every employed and unemployed person each month.

15. Lisa Fox has a job but did not work during the "reference

week" because she was on maternity leave. Lisa is considered

to be:

1. Unemployed for the entire month.
2. Employed.
3. Unemployed only for that week.
4. Not in the labor force since she gave birth already.

16. Classifying discouraged workers as unemployed would

a. increase the unemployment rate.

b. decrease the unemployment rate.

c. not change the unemployment rate.

d. have an indeterminate impact on the unemployment rate.

17. In June there are 30,000 people classified as unemployed and the size of the labor force is 600,000. The only change between June and July is that 10,000 people give up looking for work. Which of the following is true?

a. In June the unemployment rate was 6% and in July the unemployment rate was 3.8%.

b. The unemployment rate in both June and July was 5%.

c. In June the unemployment rate was 5% and in July the unemployment rate was 3.39%.

d. In June the unemployment rate was 3.8% and in July the unemployment rate was 6%.

18. People who are neither employed nor looking for a job are:

1. Unemployed.
2. Very rich.
3. Lazy.
4. Not in the labor force.

Employed 11,000 people

Unemployed 2,500 people

Not in the Labor Force 3,000 people

Table 7.1

19. Refer to Table 7.1. The labor-force participation rate is

a. 71.43%.

b. 81.8%.

c. 90.91%.

d. 136.36%.

20. The civilian population consists of those who are:

a.16 years or older

b.not in an institution (prison or mental hospital)

c.not on active duty in the Armed Forces

d.all of the above