Multiple Choice

1 . Depreciation (in the national output and income accounting process) is : a. the decrease in the overall price level b. the amount of decline in business inventories C. the amount of used up machinery, plants and equipment d. the addition to capital stock in a year 2. Legalizing all forms of illegal activities in the economy would a. reduce measured GDP b. reduce the size of the underground economy and increase measured GDP C. reduce both the underground economy and measured GDP d. increase the size of the underground economy and reduce measured GDP 3. The number of people unemployed in an economy equals a. the number of people employed minus the labor force b . the labor force plus the number of people employed C. the number of people employed divided by the labor force d. the labor force minus the number of people employed 4. If the number of people classified as unemployed is 46,000 and the number of people classified as employed is 600,000, what is the unemployment rate? a. 4.6% b. 9.2% C. 16% d. 7.1%5. When 10,500 people who were previously looking for jobs stop looking for jobs, the a. unemployment rate increases b. size of the labor force decreases C. labor-force participation rate remains unchanged d. unemployment rate remains unchanged 6. If the labor-force participation rate is 82% and the total population 16 years of age or older is 1 million people, the labor force is a. 910,000 people b. 740,000 people C. 180,000 people d. 820,000 people 7. If a worker's nominal earning rises from $700 to $825 per week, while prices of goods and services have fallen, the worker's real earning has: a. increased by more than $125 per week b . increased by exactly $125 per week C . increased by less than $125 per week d. not changed at all 8. Which of the following most accurately reflects the amount of income actually received by households after taxes? a. personal income b. gross domestic product c. personal disposable income d. net national product Refer to the figure below (next page) which is for a closed private economy, and answer questions 9 through 1 1 that follow.600 500 - 450. Planned aggregale expenditure . (billions nd dollars) 300 250 100 100 .200250 . 450500 600 Agoregate output (billions of dollars) 12. If the aggregate expenditure (AE) function is (C+D), the equilibrium level of aggregate income (Y) is a. $250 b. . $600 C. $450 P $50051 Aggregale saving(In billlans) -100 .-300 400 . 600 900 . Aggregate income [in billions) 9. If aggregate income (Y) is $400 billion, aggregate saving (S) is billion. a, $450 b. -$200 . C. -$100 d. $0 10. If aggregate income (Y) is $900 billion, aggregate consumption (C) a. is $25 billion b . is $875 billion . C . is $400 billion d cannot be determined from this information. 11. If aggregate consumption (C) is the only expenditure in this economy (i.e., investment expenditure is zero), the equilibrium level of aggregate income (Y) a. . is $800 billion b. is $900 billion C. is $400 billion d. cannot be determined from this information Refer to the figure below (next page) which is again for a closed private economy, and answer questions 12 through 14 that follow