Chapter7/8 test

 1.	Question :
Which of the following would increase this year's GDP?

 	Student Answer:		 Paying for daycare services while you attend to your work


 2.	Question :
Changes in the institutional structure of the U.S. economy following the Great Depression:

 	Student Answer:		 reduced the length of recessions.


 3.	Question :
Issues of growth are generally considered in:

 	Student Answer:	the long-run framework.


 4.	Question :
Which of the following equations is the correct equation for GDP?

 	Student Answer:	 GDP = C + I + G + X - M


 5.	Question :
The largest expenditure component of GDP is:

 	Student Answer:		 consumption.


 6.	Question :
The labor force participation rate equals the number of people:

 	Student Answer:	 	in the labor force as a percentage of the total population at least sixteen years old.


 7.	Question :
In November 2001 a recession ended. In business cycle terminology, what does November 2001 mark?

 	Student Answer:		 The trough of the cycle


 8.	Question :
The secular trend growth rate is the:

 	Student Answer:		 long term rate of growth in real output over many years.


 9.	Question :
During the business cycle, an economic expansion occurs:

 	Student Answer:		 in between the trough and peak.
 	:

 10.	Question :
When people stop looking for work because they can’t find a job, but still want a job, they’re called:

 	Student Answer:		discouraged workers.


 11.	Question :
Prior to the Industrial Revolution (pre-industrial society), unemployment was not generally considered a social problem because:

 	Student Answer:		 a reduction in spending would cause wages and income to fall rather than unemployment to rise.


 12.	Question :
Net domestic product equals:

 	Student Answer:		 consumption + investment + government purchases + net exports - depreciation.


 13.	Question :
If the CPI in year 1 equals 100 and the CPI in year 2 equals 121, it can be concluded that consumer prices:

 	Student Answer:		 rose from year 1 to year 2 by 21%.


 14.	Question :
Gross domestic product (GDP) can be calculated using either the expenditure method or the income method.

 	Student Answer:		 True

 15.	Question :
Structural unemployment is caused by:

 	Student Answer:		people losing a job when their skills become obsolete due to technological innovations.


 16.	Question :
Real gross domestic product is best defined as:

 	Student Answer:		 the market value of all final goods and services produced in an economy stated in the prices of a given (or base) year.

 17.	Question :
The rents a firm receives are classified as:

 	Student Answer:		 profits.


 18.	Question :
Okun's rule of thumb states that a:

 	Student Answer:		 1 percentage point change in unemployment will cause income to change in the opposite direction by 2 percent.


 19.	Question :
Which of the following is an example of an intermediate product?

 	Student Answer:		 The rubber used in the tires of a brand new Toyota Prius


 20.	Question :
If the price of housing (which accounts for 40% of total expenditures in the CPI basket) rises by 5% in one year while the prices of all other goods remain constant, by how much will the CPI rise?

 	Student Answer:		 2 percent