11. Which one of the following statements correctly describes real GDP?
|A. Real GDP measures the total dollar value of all goods and services produced within the borders of a country using current prices.|
|B. Real GDP measures the value of all goods and services produced in the world, using current prices.|
|C. Real GDP measures the total dollar value of all goods and services consumed within the borders of a country, adjusted for price changes.|
|D. Real GDP measures the value of final goods and services produced within the borders of a country, corrected for price changes.|
12. Melissa voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand, she’s now searching for a position in management. At the present time, Melissa is considered to be
|A. frictionally unemployed.|
|B. not a member of the labor force.|
|C. structurally unemployed.|
|D. cyclically unemployed.|
13. Which one of the following is an example of a supply shock?
|A. A surge in consumer optimism prompts increased buying of goods and services.|
|B. A dramatic increase in energy prices increases production costs for firms in the economy.|
|C. Government increases spending on education.|
|D. A surprise tax rebate from the government gives people more money to spend.|
14. Which one of the following statements about Okun’s law is correct?.
|A. Okun’s law shows the relationship between the unemployment rate and the size of the negative GDP gap.|
|B. Okun’s law measures the tradeoff between the rate of inflation and the rate of unemployment.|
|C. Okun’s law indicates the number of years it will take for a constant rate of inflation to double the price level.|
|D. Okun’s law quantifies the relationship between nominal and real incomes.|
15. Which one of the following statements about competitive market systems is correct?
|A. A competitive market system encourages growth by ensuring that everyone in society will receive a decent standard of living.|
|B. A competitive market system discourages growth because firms busy competing have no time to innovate or invest.|
|C. A competitive market system encourages growth by allowing producers to make profitable investment decisions based on market signals.|
|D. A competitive market system discourages growth unless government protects domestic firms from foreign competition.|
16. Modern economic growth refers to countries that have experienced an increase in
|A. real output per person.|
|B. nominal GDP over time.|
|C. real output spread evenly across all sectors of the economy.|
|D. real GDP over time.|
17. Which one of the following is the correct definition of inflation?
|A. Inflation is the growth phase of the business cycle.|
|B. Inflation is a situation in which all prices in the economy rise simultaneously.|
|C. Inflation is an increase in the overall level of prices.|
|D. Inflation is the rate of growth in nominal GDP.|
18. Suppose the total monetary value of all final goods and services produced in a particular country in 2008 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that
|A. GDP in 2008 is $500 billion.|
|B. GDP in 2008 is $450 billion.|
|C. inventories in 2008 fell by $50 billion.|
|D. NDP in 2008 is $450 billion.|
19. The production of durable goods varies more than the production of nondurable goods because
|A. the producers of nondurables have monopoly power.|
|B. durables purchases are postponable.|
|C. durables purchases are nonpostponable.|
|D. producers of durables are highly competitive.|
20. Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called _______ unemployment.
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