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Exam 2

Dr. Miah
A nation's GDP is
A nation's GDP can be calculated as:
The total value added at all stages of production
Which of the following statements is correct concerning GDP and GNP?
GDP measures output within the nations borders only
If GDP grows more rapidly than population for a particular country over a period of time, then we can determine that
GDP per capita has increased
Which of the following would not be included in the calculation of GDP?
Tips earned by a bartender who does not report it to the IRS
(GRAPH) In figure 5.1, during the 1980-1990 time periods, real GDP was relatively constant, but nominal GDP increased. This can be explained by:
When calculating GDP, consumption makes up approximately:
two-thirds of total output
Which of the following is used to measure GDP according to the income approach?
Income received by households before payment of personal taxes is known as:
Personal Income
According to Okun's law, if unemployment rises by 5 percent, the economy will lose output equal to:
10 Percent
The most widely used measure of the unemployment rate is found by the:
US Census Bureau in monthly surveys that examine whether people are working or are willing to work
If the population of a country is 250,000 people, its labor force consists of 145,000 people, 35,000 people are unemployed, 10,000 are unable to work, and 5,000 are unwilling to work, the unemployment rate is:
24.1 percent
When an economy enters a recession, the:
Duration of unemployment rises
Individuals who are working part-time while seeking full-time employment are classified as:
Nancy returns to school to study medicine. After graduating, she spends six months looking for a job. During this period she is considered:
Frictionally unemployed
A US worker who loses his or her job in an export industry because aggregate demand decreases would be classified as, ceteris paribus:
Cyclically unemployed
The natural rate of unemployment includes
Frictional and structural unemployment only
The term "nominal income" refers to:
Money income measured in current dollars
If a bank has already lent money at fixed interest rates, then during a period of inflation, it experiences:
Income effects
Money illusion is the:
Use of nominal dollars rather than real dollars to gauge income or wealth
Which of the following is a likely macroeconomic consequence of inflation?
The consumer price index is:
A measure of changes in the average price of consumer goods and services
The base period used in computing a price index is:
A recent year from which meaningful comparisons can be made
If nominal GDP is $9,500 billion and the GDP deflator is $118.8, then real GDP is:
$8,101.3 billion
When production costs increase and producers raise output prices, the result is:
Cost-push inflation
According to classical theory:
Flexible wages and prices allow a laissez faire economy to adjust to shifts in aggregate demand
Say's Law states that:
Supply creats its own demand
Unlike the Classical economists, Keynes asserted that:
The economy was inherently unstable
The most prolonged departure from the long-term growth path for the United States occurred during:
The great depression
The real-balance effect says that an increase in the price level:
Reduces the value of savings, which reduces the purchases of goods and services
The cost effect implies that:
Higher average prices are reflected in higher costs
Which combination of shifts of aggregate demand and supply would definitely cause an increase in real GDP?
Demand shifts to the right and supply shifts to the right
Which of the following economic perspectives focuses on the need for government to use spending and taxes to shift aggregate demand and thus correct problems of unemployment and inflation?