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Economic Growth MCQs

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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