Economic Growth MCQs GDP & Supply Shock
PART 2
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.
A.compositional |
B. frictional |
C. cyclical |
D. structural |
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