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MCQ 1 1) Home Depot sells new and used doors to contractors who build new homes. Home Depot
also sells new and used doors to homeowners. Which of the following would be counted in GDP? A) The sale of a used door to a homeowner. B) The sale of a new door to homeowner. C) The sale of a used door to TapKon construction for installation into a new home. D) The sale of a new door to TapKon construction for installation into a new home.
2) Which of the following causes the unemployment rate to understate the true extent of joblessness? A) Many full time workers really want to be part time workers. B) Persons who collect unemployment benefits report themselves to be searching for a
job. C) Discouraged workers are not counted as unemployed. D) A drug dealer reports herself as unemployed. E) Discouraged workers are counted as unemployed.
3) People who lost their jobs as hand-drawn animators because of the popularity of computer
generated 3D animation are examples of persons who are suffering A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment. E) unnatural unemployment.
4) The nominal GDP of the U.S. in 2008 was approximately $14.4 trillion. This means that A. the value of output in 2008 was around $14.4 trillion. B. total income in 2008 was around $14.4 trillion. C. total spending in 2008 was around $14.4 trillion. D. all of the above are true.
5)
Year CPI
(1982-1984 =100) 2004 100 2005 113
Suppose that the data in the table above reflects the prices in the economy. Given that data, we can say that the cost of living rose by ________ between 2004 and change the wording to purchasing power of 2005? A) 2% B) 5% C) 8% D) 11% E) 13%
6) Your grandfather tells you that he earned $5,000/year in his first job in 1949. You earn $35,000/year in your first job in 2009. You know that average prices have risen steadily since 1949. You earn
A) 7 times as much as your grandfather in terms of real income.
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B) more than 7 times as much as your grandfather in terms of real income. C) less than 7 times as much as your grandfather in terms of real income. D) less than 7 times as much as your grandfather in terms of nominal income.
7) Year Nominal Average
Hourly Earnings CPI
(1982-1984 =100) 2001 10 100 2002 10 105 2003 12 117
Looking at the table above, what is the rate of growth of real average hourly earnings from 2002 to 2003? A) 6.25% B) -4% C) 7.69% D) 4%
8) If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then A) changes in the CPI accurately reflect the true rate of inflation. B) changes in the CPI understate the true rate of inflation. C) changes in the CPI overstate the true rate of inflation. D) changes in the CPI are unrelated to the true rate of inflation.
9) If inflation increases unexpectedly, then A) borrowers lose. B) lenders lose. C) lenders gain and borrowers gain. D) neither borrowers nor lenders lose.
10) Suppose the government launches a successful advertising campaign that convinces workers
with high school degrees to quit their jobs and become full time college students. This would cause
A) the unemployment rate to decrease. B) the labor force participation rate to decrease. C) the number of discouraged workers to increase. D) no change in the unemployment rate.
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