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Meghan Gordon AP Macroeconomics

1. Which of the following is the largest component of the GDP income approach?

A) employee compensation B)  rents C) interests D)  proprietor’s income E) employer compensation

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

A) consumption spending B)  household expenditures C) government spending D)  investment spending E) net exports

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

A) proprietors income B)  employee compensation C) rents D)  employer compensation E) proprietor’s income

4. Use the following graph to answer the question:

 What can you conclude about the above graph, due to the changes in the supply and demand curves?

A) The quantity of GDP has gone up due to an increase in the supply of goods B)  The quantity of GDP has declined due to an increase in the supply of goods C) The quantity of GDP has declined due to an increase in demand for goods D)  The quantity of GDP has gone up due to an increase in demand for goods E) There is no change in GDP as both the quantity of GDP and the Price Level have risen in equally increments

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

A) value of market basket over given years B)  real GDP over given years C) nominal GDP over given years D)  real interest rates over given years E) population over given years

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

A) Real GDP; interest rate B)  Unemployment rate; nominal interest rate C) Previous year’s CPI; nominal interest rate D)  Current year’s CPI; previous year’s CPI E) Nominal interest rate; real interest rate

7. Discouraged workers are defined as those who:

A) work at low paying jobs B)  at some point actively looked for employment C) desire a larger salary D)  no longer seek employment E) both B and D

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

A) frictional unemployment B)  structural unemployment C) cyclical unemployment D)  both A and B E)  A, B, and C

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

A) 10% B)  3% C) 2% D)  8% E) 4%

10. 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?

F) 2002-2004 G)  2006-2008 H) 1996-1998 I)  2000-2002 J) 1998-2000

Answer Key: Meghan Gordon

1. Which of the following is the largest component of the GDP income approach?

A) Employee compensation

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

B) Household expenditures

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

D) Employer compensation

4. 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

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

A) Value of market basket over given years

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

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

7. Discouraged workers are defined as those who:

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

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

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

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

E) 4%

10. 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