Which of the following statements explains the difference between final goods and intermediate goods with regards to the GDP?

a	Final goods are semi-finished goods used in the production of intermediate goods, while intermediate goods are used for consumption purposes, and both are included in the GDP.
b	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, but only final goods are included in the GDP.
c	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, and both are included in the GDP.
d	Final goods are semi-finished goods used to produce intermediate goods, while intermediate goods are used for consumption purposes, but only intermediate goods are included in the GDP.
e	Intermediate goods are semi-finished goods used to produce final goods, while final goods are used for consumption purposes, but only intermediate goods are included in the GDP.

Question 2 (2 points)

(02.01 LC) The circular flow model of the economy divides economic activity into two broad categories, which are

a	capital production and government spending
b	value-added and expenditures
c	factor markets and product markets
d	businesses and banking institutions
e	private and public enterprise

Question 3 (2 points)

(02.01 HC) Use the data table to answer the question that follows.

Consumer spending	$18 trillion
Government spending	$6 trillion
Wages, business owner income, and corporate profits	$15 trillion
Exports	$3 trillion
Taxes	$3 trillion
Imports	$6 trillion
Interest payments on capital loans	$3 trillion
Business investment	$5 trillion

What would the country above's gross domestic product be for the year?

a	$23 trillion
b	$26 trillion
c	$29 trillion
d	$39 trillion
e	$59 trillion

Question 4 (2 points)

(02.02 MC) Which of the following represents a limitation in the measurement of the GDP?

a	Inventories of businesses are measured in the GDP.
b	Products from household production are not included in the GDP.
c	Household expenditure is calculated while measuring the GDP.
d	A net export of the domestic country is not included in the GDP.
e	Private investment expenditure is not included in the GDP.

Question 5 (2 points)

(02.02 MC) The GDP does not include ________ because they are considered to be ________.

a	illegal sales; non-market transactions
b	net exports; non-domestic goods
c	private investment; remittance from abroad
d	transfer payments; economic transactions
e	household production; intermediate goods

Question 6 (2 points)

(02.03 HC) The Bureau of Labor Statistics takes a survey and reports the following unemployment data:

Number of Workers Classified as Employed	180 million
Number of Workers Cyclically Unemployed	9 million
Number of Workers Frictionally Unemployed	4 million
Number of Workers Structurally Unemployed	7 million
Working-age Population	300 million

Based on this data, what is the unemployment rate for the economy?

a	10 percent
b	16.7 percent
c	40 percent
d	60 percent
e	90 percent

Question 7 (2 points)

(02.03 HC) The Bureau of Labor Statistics takes a survey and reports the following unemployment data:

Number of Workers Classified as Employed	178 million
Number of Workers Cyclically Unemployed	12 million
Number of Workers Frictionally Unemployed	3 million
Number of Workers Structurally Unemployed	7 million
Working-age Population	300 million

Based on this data, what is the natural unemployment rate in the economy?

a	3.3 percent
b	5 percent
c	6 percent
d	12 percent
e	33 percent

Question 8 (2 points)

(02.03 MC) Which of the following explains why the unemployment rate could be misleading?

a	It does not consider discouraged workers, and hence it is understated.
b	It considers discouraged workers, and hence it is overstated.
c	It considers part-timers as employed, and hence it is understated.
d	It does not consider those who were laid off due to recession, and hence it is understated.
e	It considers part-timers as unemployed, and hence it is understated.

Question 9 (2 points)

(02.03 LC) Assume that Jonathan was laid off by his company due to recession and stopped looking for work a few weeks later due to health reasons. Which of the following is true in this scenario?

a	Jonathan was initially cyclically unemployed, but he is later considered a marginally attached worker.
b	Jonathan was initially cyclically unemployed, but he is later considered a frictionally unemployed worker.
c	Jonathan was initially structurally unemployed, but he is later considered a marginally attached worker.
d	Jonathan was initially frictionally unemployed, but he is later considered a marginally attached worker.
e	Jonathan was initially frictionally unemployed, but he is later considered a cyclically unemployed worker.

Question 10 (2 points)

(02.03 MC) An economy's structural unemployment rate is 2 percent, its frictional unemployment rate is 4 percent, and its cyclical unemployment rate is 3 percent. Based on this data, its natural unemployment rate is ________ and its actual unemployment rate is ________.

a	5 percent; 6 percent
b	6 percent; 9 percent
c	7 percent; 9 percent
d	9 percent; 7 percent
e	9 percent; 6 percent

Question 11 (2 points)

(02.03 MC) Which of the following statements accurately describes the different types of unemployment?

a	There will always be cyclical unemployment.
b	Structural unemployment must always be greater than frictional unemployment.
c	The natural rate of unemployment will always equal five percent and never change.
d	The actual unemployment rate is the sum of the natural and cyclical unemployment rates.
e	Full employment is achieved when the actual unemployment rate is zero.

Question 12 (2 points)

(02.04 MC) Which of the following is true about the consumer price index (CPI) as an economic indicator?

a	The CPI is useful in understanding the level of inflation in an economy.
b	The CPI is based on the prices of all consumer goods in the market.
c	The CPI always shows an increase in the price level in an economy.
d	The CPI shows changes in the cost of living based on changes in income.
e	The CPI represents the economic growth rate.

Question 13 (2 points)

(02.04 MC) If the price of a basket of goods in the given year is $56 and the price of the basket of goods in the base year is $70, then what is the consumer price index (CPI) for the given year?

a	100
b	180
c	80
d	125
e	20

Question 14 (2 points)

(02.04 HC) Assume that an economy produces only two goods, A and B. In the base year, it produces 2 units of A at a price of $2 and 4 units of B at a price of $4. If the next year it produces the same quantity of each good with a $1 price increase for both, what is the consumer price index for that year?

a	30
b	76.9
c	125
d	130
e	175

Question 15 (2 points)

(02.04 LC) The consumer price index tends to ________ the substitution of lower-priced goods, which has the effect of ________ inflation.

a	underrepresent; overstating
b	underrepresent; understating
c	overrepresent; overstating
d	overrepresent; understating
e	ignore; understating

Question 16 (2 points)

(02.05 LC) Which of the following scenario shows the cost of unexpected deflation?

a	Consumers now have to pay more to buy goods.
b	Spending in the economy increases.
c	Workers now receive higher real wages than before.
d	Borrowers are better off than lenders.
e	Employment in the economy increases.

Question 17 (2 points)

(02.05 MC) Which of the following explains the redistribution effect of unexpected deflation?

a	There is a transfer of wealth from creditors to debtors because the money paid back will now have a higher value.
b	There is a transfer of wealth from debtors to creditors because the money paid back will now have a higher value.
c	There is a transfer of wealth from creditors to debtors because the money paid back will now have a lower value.
d	There is a transfer of wealth from debtors to creditors because the money paid back will now have a lower value.
e	There is a transfer of wealth from creditors to debtors because the money paid back will now have a lower value.

Question 18 (2 points)

(02.06 MC) Use the data table to answer the question that follows.

Year	Nominal GDP	GDP Deflator
2000	$100 billion	80
2001	$117 billion	90
2002	$135 billion	100
2003	$200 billion	160
2004	$225 billion	250

In which year was real gross domestic product the greatest?

a	2000
b	2001
c	2002
d	2003
e	2004

Question 19 (2 points)

(02.06 MC) If the GDP deflator increases from 100 in the base year, to 125 five years later, to 150 the following year, what was the rate of inflation for from year 5 to year 6?

a	10 percent
b	16.7 percent
c	20 percent
d	25 percent
e	50 percent

Question 20 (2 points)

(02.06 MC) Use the data table for country B to answer the question that follows.

Year	Real GDP	GDP Deflator
2019	$50,000	400
2020	$40,000	200

What is the change in the nominal GDP from 2019 to 2020?

a	The nominal GDP has increased by $120,000.
b	The nominal GDP has increased by $100,000.
c	The nominal GDP has decreased by $120,000.
d	The nominal GDP has remained constant.
e	The nominal GDP has decreased by $100,000.

Question 21 (2 points)

(02.06 MC) For country XYZ, a study shows that the nominal GDP was $2,400 billion, whereas the real GDP was less than the nominal GDP because of the GDP deflator that was standing at 120. Considering this, what was the value of real GDP?

a	$4,800 billion
b	$3,600 billion
c	$1,200 billion
d	$2,000 billion
e	$2,400 billion

Question 22 (2 points)

(02.07 LC) At the current equilibrium real GDP, there is a recessionary output gap. Which of the following must be true?

a	There is no cyclical unemployment.
b	The economy is expanding.
c	The economy is at full employment.
d	The actual unemployment rate is higher than the natural rate.
e	There is inflation that is higher than expected.

Question 23 (2 points)

(02.07 MC) In which year did the economy above most likely have an actual unemployment rate equal to the sum of its frictional and structural unemployment rate?

a	2000
b	2004
c	2010
d	2015
e	2019

Question 24 (2 points)

(02.07 MC) Which of the following best describes the turning points of the business cycle?

a	Expansion and contraction
b	Peak and trough
c	Peak and contraction
d	Recession and expansion
e	Trough and recession