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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?


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