Exam: 050473RR – GDP, GROWTH, AND STABILITY
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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.
1. Which one of the following statements about GDP is correct? A. GDP is the monetary value of all goods and services, final and intermediate, produced in a specific year. B. GDP is the national income minus all nonincome charges against output. C. GDP is the monetary value of all final goods and services produced within the borders of a nation in a particular year. D. GDP is the monetary value of all economic resources used in producing a year’s output.
2. The system that measures the economy’s overall performance is formally known as A. GDP assessment. B. business cycle measurement. C. national income accounting.
D. final output and income statistics.
3. Which one of the following statements about competitive market systems is correct?
A. A competitive market system encourages growth by allowing producers to make profitable investment decisions based on market signals.
B. A competitive market system discourages growth unless government protects domestic firms from foreign competition. C. A competitive market system encourages growth by ensuring that everyone in society will receive a decent standard of living. D. A competitive market system discourages growth because firms busy competing have no time to innovate or invest.
4. Suppose the total monetary value of all final goods and services produced in a particular country in 2008 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that
A. GDP in 2008 is $500 billion. B. NDP in 2008 is $450 billion. C. GDP in 2008 is $450 billion. D. inventories in 2008 fell by $50 billion.
5. The production of durable goods varies more than the production of nondurable goods because
A. durables purchases are nonpostponable. B. producers of durables are highly competitive. C. durables purchases are postponable.
D. the producers of nondurables have monopoly power.
prices
6. Inflation initiated by increases in wages or other resource prices is labeled _______ inflation. A. cost-push B. cost-pull C. demand-push
D. demand-pull
7. Given the annual rate of economic growth, the “rule of 70” allows one to
A. determine the accompanying rate of inflation. B. calculate the size of the GDP gap. C. determine the growth rate of per capita GDP.
D. calculate the number of years required for real GDP to double.
8. The two topics of primary concern in macroeconomics are
A. short-run fluctuations in output and employment, and long-run economic growth. B. monopoly power of corporations, and small business profitability. C. oil prices and housing markets. D. unemployment, and wage rates in labor markets.
9. The percentage of the working-age population in the labor force is called the
A. labor force participation rate. B. work-nonwork ratio. C. employment-population ratio.
D. work-activity rate.
10. Which one of the following economic regions has experienced the least growth in real GDP per capita
since 1820?
A. Africa B. Latin America C. Asia excluding Japan D. Western Europe
11. Which one of the following is most closely related to recessions?
A. Falling rates of unemployment B. Rapid growth in the price level C. Negative growth in output
D. Positive long-run economic growth
12. Which one of the following statements correctly describes real GDP?
A. Real GDP measures the value of final goods and services produced within the borders of a country, corrected for price changes.
B. Real GDP measures the value of all goods and services produced in the world, using current prices.
C. Real GDP measures the total dollar value of all goods and services produced within the borders of a country using current prices.
D. Real GDP measures the total dollar value of all goods and services consumed within the borders of a country, adjusted for price changes.
13. Prices tend to be sticky because
A. firms are worried about frequent price changes that would annoy consumers. B. government controls most prices. C. most firms have agreements with each other to fix prices at profit-maximizing levels. D. foreign competition discourages domestic firms from price changes.
14. Melissa voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand, she’s now searching for a position in management. At the present time, Melissa is considered to be
A. frictionally unemployed. B. structurally unemployed. C. cyclically unemployed. D. not a member of the labor force.
15. Innovations such as the microchip and the Internet lead to business cycle variations because
A. significant innovations occur irregularly and unexpectedly. B. the central bank will often change the money supply in response. C. they cause prices to be sticky.
D. they cause prices to be flexible.
16. Which one of the following statements about national income is correct?
A. National income is the before-tax income received by households. B. National income is the income earned by U.S. resource suppliers plus taxes on production and imports. C. National income is the income received by households less personal taxes. D. National income is the market value of the annual output net of consumption of fixed capital.
17. Which one of the following is an example of a supply shock?
A. A dramatic increase in energy prices increases production costs for firms in the economy. B. A surge in consumer optimism prompts increased buying of goods and services. C. Government increases spending on education. D. A surprise tax rebate from the government gives people more money to spend.
18. Other things equal, which one of the following would increase the rate of economic growth, as measured by changes in real GDP?
A. A decline in the average length of the work week B. An increase in the size of the working-age population C. A decrease in the labor force participation rate D. A decline in the amount of capital per worker
19. The largest component of total expenditures in the United States is
A. government purchases. B. consumption. C. net exports. D. gross investment.
20. Which one of the following is not considered to be a growth-promoting institutional structure?
A. Financial institutions that effectively link savers to investors B. Strong government restrictions on international trade C. A competitive market system
D. Well-established and enforced property rights
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