01 On Level Macro

Which phrase BEST explains the difference between nominal and real Gross Domestic Product (GDP)?

• Real GDP is adjusted for inflation.

• Nominal GDP measures the total output of a country.

• Real GDP measures the level of wealth of a geographic area.

• Nominal GDP is adjusted using the production possibility curve

When a carpenter buys paint from overseas in order to paint a deck on someone’s house, the paint for the deck is...

• part of the Consumption portion of GDP.

• part of the Net Exports portion of GDP.

• not counted because it is an intermediate good.

• not counted because it is a second-hand item

Which of these will have an effect on the GDP of the country?

• Monty buys a Picasso painting.

• Lisa loses $20.00 in a bet with Bart.

• Ned fixes Jay’s car without buying any new parts.

• The Shelbyville Whoopee Cushion company makes 1,000 to export to China.

What is Macroeconomics?

• The policy where the government uses taxes and spending to influence the economy

• The study of the economy as a whole 

• The total amount of goods and services produced in a year

• The policy the fed uses to control the money supply

What should motivate someone to ASK FOR A RAISE?

• Unemployment

• GDP

• Inflation

• The Business Cycle

Jordan has a fixed interest rate of 6% on her 20 year mortgage. Which statement demonstrates the effect of unanticipated inflation on Jordan’s ability to repay her loan?

• She loses because her interest rate will rise when there is more inflation

• She loses because the bank will now expect her to repay the balance of the loan immediately

• She gains because she is repaying the loan with money that has less purchasing power than the money she borrowed

• She gains because the loan will now take less time to repay the mortgage

Of the following groups, the one hurt MOST by unanticipated inflation is:

• Retirees who are living on fixed income

• Workers with cost-of-living adjustment contracts

• Banks who have made short-term adjustable rate mortgages

• People who have invested savings in variable rate returns

Which statement explains how a large increase in the price of gasoline would affect a country’s economy?

• Prices would become unstable and create a money illusion.

• Prices would become stable and allow consumers to buy more.

• Prices would become stable and permit banks to raise interest rates.

• Prices would become unstable and erode the value of money and savings.

Use the chart to the right. What is the MOST likely cause of the change in CPI between 2008 and 2009?

• Decrease in government regulation

• Increase in economic activity

• Increase in overall taxes

• Decrease in inflation

Which of the following people would be officially counted in the United States unemployment statistics?

• George is a full-time college student who is too busy to work.

• Jenna was fired from her job last week.

• Larry retired last year and spends his days fishing and watching ESPN.

• Joe works part time, but hopes to pick up more hours soon.