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AP Macroeconomics Unit 2
Test Description: Review
Instructions: Answer all questions to get your test result.
1) The largest dollar amount of national income is
A
rental payments
B
profit
C
government expenditures on goods and services
D
wages and salaries to employees
2) Which of the following people would be considered unemployed?
A
A person who works two part-time jobs but is looking for a full-time job
B
A person who stayed at home to raise his kids and now starts looking for a job
C
A person who is qualified to teach but is driving a bus until a teaching job is available
D
A person who quits work to care for aging parents
3) Which of the following would be an example of an intermediate good or service?
A
A car purchased by a student’s parents and given to the student
B
Gasoline purchased by an insurance agent to visit clients at their homes
C
Tuition paid by a student at a state university
D
A calculator purchased by a college student for taking exams
4) Which of the following would be included in the calculation of gross domestic product?
A
Contributions to a charity organization
B
Social Security payment to a retired military officer
C
The purchase of a home built 10 years ago
D
Government purchase of a new submarine
5) Which of the following indicates that the macroeconomy is achieving its economic goals?
A
Declining GDP
B
Unemployment
C
Economic Growth
D
Inflation
6) Which of the following purchases is included in the calculation of gross domestic product?
A
Government bonds issued by a foreign firm
B
New harvesting equipment on the farm
C
1,000 shares of stock in a computer firm
D
a car produced in a foreign country
7) The consumer price index (CPI) is criticized because
A
it reflects the quality of goods produced
B
it reflects the prices of both intermediate goods and final goods
C
it does not recognize consumers’ ability to substitute goods and services as prices change
D
it recognizes consumers’ ability to substitute goods and services as prices change
8) Which of the following could be counted as investment when calculating gross domestic product?
A
The purchase of a used computer by an auto manufacturer
B
The construction of a new house
C
The construction of roads by the government
D
The profit earned when selling shares of stock
9) When the actual inflation rates is greater than the anticipated inflation rate,which of the following is most likely to suffer?
A
Those who lend at a fixed interest rate
B
Retired persons with cost-of-living adjustments in their benefits
C
Employers who hire workers with long-term labor contracts
D
Those who lend with flexible interest rates
10) Which of the following will be counted as unemployed by the United States Bureau of Labor Statistics?
A
Persons who were fired from their previous jobs and are actively applying for work
B
Persons who quit their previous jobs to stay at home to care for sick parents
C
Persons who were laid off from their previous jobs and have not applied for a job in two years
D
Persons who quit their previous jobs to start their own businesses
11) Country A’s growth rate in per capita real gross domestic product (GDP) has been consistently higher than that of Country B. Which of the following factors can account for these differences in the per capita GDP growth rates?
A
The natural rate of unemployment is higher in Country A.
B
Country B’s government gives more investment tax credits.
C
The labor force of Country A is becoming more skilled than the labor force of Country B.
D
Country A’s central bank is less effective at controlling the inflation rate.
12) Which of the following is true if real GDP in Year 1 is $5,000 and in Year 2 is $5,200?
A
The economy is experience a recession
B
Output has declined by 4 percent
C
The economy is experiencing 4 percent inflation
D
Output has increased by 4 percent
13) Frictional unemployment occurs when which of the following happens?
A
A worker is replaced by robots on factory assembly lines.
B
A worker switches from working full-time to part-time.
C
A worker undergoes on-the-job training.
D
A worker voluntarily quits a job to search for a better one.
14) The natural rate of unemployment can be defined as the
A
economy’s long-run equilibrium rate of unemployment
B
unemployment rate of the least-skilled workers
C
unemployment rate consistent with accelerating inflation
D
labor force participation rate minus the unemployment rate
15) Nominal GDP is:
A
the inflation adjusted GDP.
B
the real GDP minus depreciation.
C
the constant dollar GDP.
D
the current dollar GDP.
16) Amy just graduated from college. She recently quit her part time job to focus on finding a full time job which uses her skills she has acquired in college better. Amy is considered:
A
frictionally unemployed.
B
out of the labor force.
C
employed since she is focusing on finding a full time job.
D
cyclically unemployed.
17) Which of the following represents the best scenario for a bank lending its money to a customer?
A
fixed interest rate of 12% with 7% inflation
B
fixed interest rate of 11% with 5% inflation
C
fixed interest rate of 8% with 1% inflation
D
fixed interest rate of 19% with 15% inflation
18) Cyclical unemployment is characterized as:
A
a situation when there are not good matches between available jobs and the skills people have.
B
the normal unemployment around which the actual unemployment rate fluctuates.
C
unemployment that occurs when people are between jobs.
D
the deviation in the actual rate of unemployment away from the natural rate.
19) Which of the following is true concerning interest rates?
A
The real interest rate cannot be negative.
B
The real interest rate can be zero, positive, or negative.
C
The nominal interest rate can be negative.
D
The real interest rate can only be positive.
20) An example of frictional unemployment is a(n):
A
autoworker who is temporarily laid off from an automobile company due to a decline in sales.
B
worker at a fast-food restaurant who quits work and attends college full time.
C
real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California.
D
geologist who is permanently laid off from an oil company due to a new technological advance.
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