answer+page--unit+two

Jake Howard 1. GDP will not include I) The purchase of items at a grocery store II) The sale of a couch at a garage sale III) The purchase of a couch at a store
 * Answer Page--Unit Two**
 * B) II **

Jake Howard 2. What may change the natural rate of unemployment?
 * E) All of the above **

Jake Howard 3. The types of unemployment that are always present in an economy are I) Structural Unemployment II) Frictional Unemployment III) Cyclical Unemployment
 * D) I & II **

Jake Howard 4. CPI can be used to calculate
 * C) Rates of inflation **

Jake Howard 5. What point(s) are currently in the recessionary phase of the business cycle?
 * D) 2 & 3 **

Jake Howard 6. Given Employed = 600, Unemployed = 300 and not in labor force = 100 which of the following are true? I) Labor Force = 600 II) Labor Force Participation Rate = 90% III) Total Population = 1000
 * D) II & III **

Jake Howard 7. This graph is an example of [blank] inflation, as a result prices will [blank] and output will [blank].
 * B) Cost Push, increase, decrease **

Jake Howard 8. Okon’s Law states that for every [blank] % that unemployment exceeds the natural rate of unemployment, a [blank] % gap in GDP occurs.
 * D) 1, 2 **

Jake Howard 9. An increase which item will not always increase capital gain I) GDP II) Inputs of resources III) Productivity of resources IV) Technology
 * A) I **

Jake Howard 10. What is equal to ( (CPI for year 2 – CPI for year 1)/(CPI for year 1)) X 100
 * C) Inflation rate

 Thomas Buscemi 11. Which of the following would GDP include? ****e. Going to the movies**

Thomas Buscemi 12. Which of these wouldn’t be structural unemployment?
 * a. GM lays off 5000 workers due to the recession**

Thomas Buscemi 13. Nominal Interest Rate=
 * c. Real interest rate + Expected Inflation**

Thomas Buscemi 14. Inflation means
 * e. Increase in Prices**

Thomas Buscemi 15. Which point is operating during an expansionary business cycle
 * e. E**

Thomas Buscemi 16. What is the natural Rate of Unemployment in America
 * d. 4%**

Thomas Buscemi 17. If The Nation of Corinth Produces only Xboxes then what is GDP $500 Xbox (5) $600 Xbox 360 (7)
 * d. $6700**

Thomas Buscemi 18. What does X stand for [| �27�]
 * e. Net exports +consumer spending+ investment + government spending**

Thomas Buscemi 19. What is the underground economy
 * b. Money not recorded in GDP**

Thomas Buscemi 20. Higher unemployment does which of the following I. Reduces long run Aggregate supply II. Reduces GDP III. Results in lower Aggregate demand
 * E. II, III Only**

(Mallika Halder) 21) The most frequently used price indexes are: i. Producer Price Index (PPI) ii. Consumer Price Index (CPI) iii. GDP Price Deflator
 * e) i, ii, and iii**

(Mallika Halder) 22) All of the following groups of people are hurt by unanticipated inflation except:
 * c) borrowers**

(Mallika Halder) 23) Which of the following are phases that describe the business cycle?
 * e) all of the above**

(Mallika Halder) 24) Which of the following types of unemployment exist even with zero cyclical unemployment: i. Frictional unemployment ii. Structural unemployment iii. Full Employment
 * c) i and ii**

(Mallika Halder) 25) GDP counts which of the following?
 * c) profits earned by foreign-owned businesses**

(Mallika Halder) 26) Unemployment can be classified in four ways. Which definition matches the correct unemployment type? **e) Frictional Unemployment-** **unemployment that comes from people moving between jobs, careers, and locations.**

(Mallika Halder) 27) There are four phases of a business cycle. Which of the following terms correspond the numbers on the graph?
 * d) 1. Peak 2. Recession 3. Trough 4. Recovery**

(Mallika Halder) 28) During a recession, economic outputs are declining. Respectively, how are unemployment and inflation affected?
 * d) increasing, decreasing**

(Mallika Halder) 29) Large foreign-owned businesses are profitable in the United States. How will this affect GDP on the domestic AS/AD curve?
 * e) Domestic GDP will not change**

(Mallika Halder) 30) The basic measurement of output and production in the U.S changed from GNP to GDP in 1991. Most other nations already used GDP. What does this reflect?
 * b) increasing interdependence of world economics

Meghan** 31. Which of the following is the largest component of the GDP income approach?

A) Employee compensation

32. Which of the following is not a component of GDP (Gross Domestic Product)?

B) Household expenditures

33. Which of the following is **not** one of the nine components of GDP income approach?

D) Employer compensation

34. Use the flowing graph to answer the question: What can you conclude about the above graph, as the supply and demand curves relate to GDP?

D) The quantity of GDP has gone up due to an increase in demand for goods

35. What is essential to calculate CPI (Consumer Price Index)?

A) Value of market basket over given years

36. To calculate the rate of inflation you must have?

D) Current year’s CPI; previous year’s CPI

37. Discouraged workers are defined as those who:

E) Both B and D (at some point actively looked for employment; no longer seek employment)

38. An economy is considered “fully employed” when it is experiencing:

D) Both A and B (frictional and structural unemployment)

39. Generally, the Natural Rate of Unemployment (NRU) for the United States is about:

E) 4%

40. Use the following graph and table to answer the question: Based upon the above business cycle graph and table you can conclude that the first trough occurs between what years?

D) 2000-2002

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