1. Which of the following questions would be studied primarily by macroeconomists? (select as many as apply)
   1. Does increased government spending decrease the unemployment rates?
   2. Does Googles dominance of internet searches harm consumers?
   3. Would a school voucher program increase the quality of education in the US?
   4. Should policymakers try to further reduce inflation?
   5. What factors can lead to recessions?
   6. How does market power in the market for cable TV affect consumers?

2. An economy produces 1,000,000 cars valued at $20,000 each. Of these, 200,000 are sold to businesses, 700,000 are sold to consumers, and 50,000 are sold to the government, and 25,000 are sold abroad. No cars are imported into the country. Any cars left unsold at the end of the year are held in inventory by the car manufacturers.
   1. Find GDP in terms of the market value of production
   2. Find GDP in terms of the components of expenditure
   3. How would your answers to parts (a) and (b) change if 100,000 of the 700,000 cars bought by households were produced abroad instead of domestically?

3. In one sentence or less, what happens to US GDP and its components (use the expenditure method) in the following situation: Bill gets his pension check from the US federal government and buys a watch made in China for $100?

4. For each of the following statements, decide if the statement is true or false and explain why:

1. If Jane buys a brand new 2016 car in 2017, 2017 GDP does not change.
2. The CPI is a better indicator of the price level than the GDP deflator