Directions: Read and answer each question carefully. Mark your answers on your bubble sheet. Do NOT write on exam. 1. What does the GDP, gross domestic product, measure? A) the amount of goods bought and sold within a country in a given year B) the amount of exported goods a country produces within a fiscal quarter C) the total value of imported goods a country purchases within a fiscal quarter D) the total value of all final goods and services produced in a particular country in a given year 2. Which of the following would be counted when measuring a country s GDP? A) human capital B) a sold computer C) natural resources D) factors of production 3. All of the following are included in GDP EXCEPT A) the income from a garage sale. B) the value of a new car. C) the value of a new house. D) the sale of an ice cream cone. 4. How do economists determine the real GDP per capita? A) They multiply the real GDP by the nomial GDP. B) They divide the real GDP by the total population. C) They divide the total population by the real GDP. D) They divide the nomial GDP by the total population. 5. All of the following will contribute to an increase in real GDP from year to year EXCEPT A) capital deepening. B) increases in imports. C) decreases in population. D) increases in exports
6. Which option below best represents what is included in the calculation of the United States gross domestic product (GDP)? A) 1 B) 2 C) 3 D) 4 7. The is a pattern of irregular yet repeated flow of expansion and contraction of aggregate economic activity. A) economic revolution B) gross domestic calculation C) business cycle D) macroeconomic scale 8. What are two phases of the business cycle? A) peak and depression B) depression and recession C) depression and expansion D) recession and expansion 9. A severe recession with high unemployment, acute shortages, and excess manufacturing capacity is known as A) a trend line B) a depression C) a trough D) a business fluctuation 10. What term references a period of economic growth as measured by a rise in the real GDP? A) trough B) recession C) expansion D) depression
11. Periods of economic contraction are measured by a of real GDP. A) rise B) decline C) increase D) stabilization 12. What does the quantity theory speculate about the cause of inflation? A) when there s a lot of currency in circulation, inflation can occur B) when a good decreases in value, its price will rise and inflation can occur C) when increased costs provoke producers to raise prices, inflation can occur D) when demand for goods and services exceeds the supply available inflation can occur 13. All of the following are consequences of inflation EXCEPT A) the dollar buys less. B) speculation increases. C) interest rates decrease. D) The distribution of income is altered. 14. Which of the following statements about economic growth is FALSE? A) Economic growth raises the standard of living. B) Economic growth helps solve domestic problems. C) Economic growth decreases the tax base. D) Economic growth helps foreign trade partners. 15. Economic growth benefits the government by A) enlarging the tax base. B) reducing budget surpluses. C) reducing defense spending. D) justifying tax increases 16. Which of the following factors affect economic growth? A) land B) capital C) labor D) all of the above
17. The highest unemployment rate is most likely to occur during which of the following phases of the business cycle? A) an economic trough. B) a recession. C) an economic peak. D) an expansion. 18. During which of the following phases of the business cycle does the real GDP fall? A) trough B) expansion C) contraction D) peak 19. When a construction worker cannot work because of a winter snowstorm, he is A) cyclically unemployed. B) structurally unemployed. C) seasonally unemployed. D) frictionally unemployed. 20. A telephone receptionist loses his job when a computerized voice mail system is installed at his office. He is A) seasonally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) structurally unemployed. 21. An assembly line worker in an automobile plant is laid off during a recession She is A) seasonally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) technologically unemployed. 22. What term describes the short period of unemployment used for matching job seekers to jobs? A) cyclical unemployment B) structural unemployment C) frictional unemployment D) seasonal unemployment
23. A budget in which more is spent than collected is in A) overextension. B) surplus. C) balance. D) deficit. 24. What is the total amount of money owed by the government? A) the national investment B) the national debt C) the national deficit D) the national balance 25. Which of the following is a TRUE statement regarding the Federal Reserve System? A) The national government owns the Federal Reserve System. B) Every bank in the United States is a member of the Federal Reserve System. C) The chair of the Board of Governors is hired by the president of the Federal Reserve. D) The Federal Reserve System serves as the banker of the United States federal government. 26. Which of the following is NOT a responsibility of the Federal Reserve System? A) The Fed only loans money to member banks. B) The Fed issues all of the U.S. currency for the U.S. treasury. C) The Fed sells, transfers, and redeems government bonds, bills, notes, and securities. D) The Fed regulates the banking system by monitoring how much money each bank has in reserve. 27. The actions the Federal Reserve takes to influence the level of the real GDP and the rate of economic inflation is called the A) federal budget policy. B) fiscal policy. C) monetary policy. D) reserve policy.
28. An increase in the rate of inflation will result in a decrease in which of the following? A) Federal and state income taxes B) The purchasing power of the dollar C) The level of prices D) Interest rates 29. Based on the graph above, we know that between 1998 and 2001: A) Many jobs were lost in America, and the unemployment rate rose B) American GDP went up by about 2 percent per year C) The average price of goods began to increase at a higher rate D) The economy was at its highest point overall in the years shown 30. An increase in the rate of inflation will result in a decrease in which of the following? A) Federal and state income taxes B) The purchasing power of the dollar C) The level of prices D) Interest rates 31. Which of the following is a policy tool of the Federal Reserve? A) Raising or lowering income taxes B) Increasing or decreasing unemployment benefits C) Increasing or decreasing the Reserve Requirement D) Increasing or decreasing government spending
32. In a product market: A) Businesses purchase resources from households in exchange for money B) Businesses purchase finished goods and services in exchange for money C) Households purchase resources in exchange for money D) Households purchase finished goods and services in exchange for money