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# Real GDP (billions of 2000 dollars)

\$10,100

10,950

11,425

11,300

Using the table above, what is the approximate growth rate of real GDP from 2009 to 2010?

A) 1%

B) 2%

C) 3%

D) 4%

3. If GDP grows at a rate of 3% per year, approximately how long will it take for GDP to double in size?

A) 12 years

B) 21 years

C) 23 years

D) 35 years

4. The rule of 70 states that

A) it takes an economy 70 years to double its real GDP.

B) the number of years it takes an economy to double in size is 70 divided by the growth rate.

C) the number of years it takes an economy to double in size is the growth rate times 70.

D) the number of years it takes an economy to double in size is the growth rate divided by 70.

5. If, between 2001 and 2011, the economy's real GDP grew from \$20 billion to \$40 billion, what was the average annual growth rate in the economy?

A) 3%

B) 7%

C) 20%

D) 100%

6. If GDP is currently \$13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach \$26 trillion?

7. Which of the following is most likely to be able to sustain economic growth in an economy?

A) sustained increases in the labor force participation rate

B) technological change

C) increases in capital per hour worked

D) accumulations of economic resources

8. Public saving in the economy can be increased by

A) lowering taxes.

B) raising government spending.

C) raising taxes.

D) raising transfer payments.

9. If real GDP in a closed economy is \$40 billion, consumption is \$20 billion, and government purchases are \$10 billion, what is investment?

A) \$10 billion

B) \$30 billion

C) \$40 billion

D) \$70 billion

10. In a closed economy, what is the relationship between saving and investment?

A) Saving is greater than investment.

B) investment is greater than saving.

C) Investment is equal to saving.

D) Investment may be greater or smaller than saving.

11. An increase in the real interest rate does which of the following?

A) reduces the demand for loanable funds

B) reduces saving

C) reduces consumption spending

D) increases the demand for loanable funds

12. Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

A) an increase in the demand for loanable funds

B) an increase in the quantity of loanable funds demanded

C) an increase in the supply of loanable funds

D) an increase in the quantity of loanable funds supplied

13. An increase in the real interest rate results in which of the following?

A) an increase in the demand for loanable funds

B) a decrease in the demand for loanable funds

C) an increase in the quantity of loanable funds supplied

D) Both B and C will occur as a result of an increase in the real interest rate.

14. Because ________ in the government budget deficit increase the real interest rate, budget deficits can ________ firm investment.

A) increases; increase

B) decreases; increase

C) decreases; decrease

D) increases; decrease

15. The best measure of a country's standard of living is

A) GDP per labor hour.

B) GDP per unit of capital.

C) GDP per capita.

D) total nominal GDP.

16. If a country's real GDP is rising by 3% per year while its population is rising at 5% per year, which of the following is true?

A) The country's standard of living is falling.

B) The country's standard of living is rising.

C) Growth in nominal GDP outweighs growth in the population.

D) Growth in nominal GDP is less than the growth in the population.

17.

 Country GDP (billions of dollars) Population (millions of people) Sweden \$3.85 9.05 Ireland 2.23 4.21

Based on the table above, which country has a higher standard of living and why?

A) Sweden has a higher standard of living because their GDP is higher.

B) Ireland has a higher standard of living because their GDP per capita is higher.

C) Sweden has a higher standard of living because their GDP per capita is higher.

D) Ireland has a higher standard of living because growth in GDP is greater in Ireland than in Sweden.

18. The key factors in raising standards of living in low-income countries have been increases in

A) capital accumulation and the money supply.

B) technology and knowledge.

C) foreign aid and population.

D) income and government ownership of resources.

19. The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant.

A) supply and demand

B) national income

C) aggregate expenditure

20. The key idea of the aggregate expenditure model is that in any particular year, the level of ________ is determined mainly by the level of aggregate expenditure.

A) frictional unemployment

B) export spending

C) government spending

D) GDP

21. Which of the following people would be considered unemployed?

A) Homer, who lost his job at the power plant and is not looking for work

B) Lenny, who is working part time at a fast food restaurant

C) Abe, who is retired

D) Edna, who lost her job as a teacher and is currently searching for a new job

22. Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

A) consumption

B) planned investment

C) government purchases

D) transfer payments

23. Individuals who have stopped looking for work because they are convinced that they will not find a job are considered

A) structurally unemployed.

B) discouraged workers.

C) part of the labor force.

D) underemployed.

24. The rate of unemployment is calculated as the number of

A) unemployed workers divided by the number of employed workers.

B) people in the labor force divided by the number of unemployed.

C) unemployed divided by the number of people in the labor force.

D) employed workers divided by the number of unemployed workers.

25. The total civilian labor force is comprised of

A) the unemployed and the employed.

B) only the employed.

C) all individuals over 16 years of age, whether or not they work or are seeking work.

D) only full-time employed individuals between the ages of 18 and 55.

26. Which of the following best fits the definition of unemployed?

A) Retired and not working

B) Working less than a full work week

C) Not working but looking for a job

D) Not working at a gainful pursuit, either in or out of the home

27. The labor force is defined as the number of

A) employed plus the number of unemployed.

B) people who are working.

C) people who are working in labor-type jobs.

D) union members who are working.

28. A person who previously had a full-time job has been paroled from prison and has applied for a job is considered

A) a reentrant.

B) a job loser.

C) a new entrant.

D) not in the labor force.

29. To be considered officially unemployed, a person must be at least 16 years old

A) and not working.

B) and not in school and not working.

C) and be a discouraged worker.

D) and not working but is actively seeking employment.

30. The labor force includes all of the following individuals who are 16 years or older EXCEPT

A) people who have never been in the labor force but have just found a job.

B) the employed.

C) the unemployed.

D) people who are retired and not actively seeking work.

31. The term "unemployment" is best described as the total number of

A) people not working.

B) people who have been laid off and have stopped looking for work.

C) adults who work fewer hours than they wish to work.

32. Consumption spending refers to ________ spending on goods and services.

A) household

C) government

D) foreign

33. Which of the following is not a component of aggregate expenditure?

A) consumption spending

B) planned investment spending

C) actual investment spending

D) government spending

34. Aggregate expenditure includes spending on

A) C + I + G - T.

B) C + I + G + T.

C) C + I + G .

D) C + I + depreciation.

35. Goods that have been produced but not yet sold are referred to as

A) understocks.

B) inventories.

C) pre-sold goods.

D) capital goods.

36. 14) Macroeconomic equilibrium occurs when

A) aggregate expenditure = GDP.

B) aggregate expenditure = C+ I + G + net transfers.

C) aggregate income = planned inventories.

D) aggregate expenditure = planned inventories.

37. When aggregate expenditure is less than GDP, which of the following is true?

A) There was an unplanned increase in inventories.

B) Firms spent more on capital goods than they anticipated.

C) Households bought more new homes than they anticipated.

D) All of the above must be true when aggregate expenditure is less than GDP.

38. If firms sell what they expected to sell, which of the following will be true?

A) Aggregate expenditure will be greater than GDP.

B) There is no unplanned change in inventories.

C) Inventories will rise, and GDP and employment will fall.

D) Aggregate expenditure will be less than GDP.

39. If economists forecast an increase in aggregate expenditure, which of the following is likely to occur?

A) GDP will rise.

B) GDP will fall.

C) Wages will fall.

D) Inventories will rise.

40. Consumption spending will ________ when disposable income ________.

A) increase; increases

B) increase; decreases

C) decrease; increases

D) change unpredictably; decreases

Date: 2015-12-11; view: 2586

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