1)Why is real GDP a more accurate measure of an economy's production than nominal GDP?

a. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

b. Real GDP is not influenced by price changes, but nominal GDP is.

c. Real GDP measures the value of goods and services an economy produces, but nominal GDP measure the income earned during the production process.

d. Real GDP measures the amount of spending on goods and services, but nominal GDP measures the value of goods and services an economy produces.

2)Which of the following equations best represents gross domestic product (GDP):

a. income + savings

b. prices - spending

c. prices - income

d. prices x output

3)Given the GDP data in the above graph, which period is associated with the highest unemployment rate?

Select one:

a. A

b. B

c. C

d. D

4)What is the minimum amount of time an economy must contract for it to be in a state of recession?

Select one:

a. Two consecutive quarters

b. Two consecutive months

c. One year

d. Six months

5)

DATA HUNT:

Figure 1.1 shows the change in the unemployment rate during the 2000s. Even though the 2008 recession ended in June 2009 the unemployment rate continued to climb and eventually reached 10%. To put this indicator in perspective you will need to find the month and year when the unemployment rate was higher than 10%. Use this link (http://data.bls.gov/cgi-bin/surveymost?bls) to access unemployment data from the Bureau of Labor Statistics. You will need to start your search in 1948 and then select the period with the highest unemployment rate and enter it below. Enter your data in the two digit month. year format. For example, if the period with the highest unemployment rate was in June 1953 the you will enter: 6.53 .If there are two consecutive months with the same unemployment rate then use the first month for your answer.

6) (Pick answer in parenthesis) Lehman Brothers, an investment bank, filed for bankruptcy in September 2008. In that quarter, real GDP fell at a Answer (3.7,4.7,5.7) percent annual rate. Then it dropped at a frightening Answer(8.9,7.7,5.4) percent rate in the fourth quarter.

7)During the 2008 recession, which of the following industries suffered the greatest decline in activity:

a. Information and Technology (IT)

b. Transportation

c. Automotive

d. Housing

8)The category long-term unemployed includes unemployed who have been out of work for at least:

a. 6 months

b. 1 year

c. 2 years

d. More than 3 years

9) One of the most important labor statistics is the labor force. This indicator is included in the calculations for the unemployment rate and participation rate. The labor force can be described as:

a. All people who are either working or actively looking for work.

b. The entire population of a country

c. The entire population of a country over the age of 16 years.

d. All employed people.

10 ) (Pick answer in parenthesis) Quarterly GDP statistics date back to Answer (1947,1930,1937) , and during all of those years from then until the start of the Great Recession, Answer real nominal GDP declined for two consecutive quarters only Answer (9,4,15) times. 

FIGURE 1.5 Falling Off the Table ! (real GDP growth, in percent) A B 2 -4 -6 -8 -10 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 4,