AP Macro Unit 2 Review

Which of the following is a component of the expenditure approach to measuring GDP?

• Net Exports

• Government Debt

• Transfer Payments

• Stock Market Investments

Explain how the income approach to GDP measurement accounts for depreciation.

• It adds depreciation to the total income.

• It subtracts depreciation from the total income.

• It ignores depreciation entirely.

• It multiplies depreciation by the total income.

Which type of unemployment is characterized by workers voluntarily leaving their jobs to find better opportunities?

• Structural Unemployment

• Frictional Unemployment

• Cyclical Unemployment

• Seasonal Unemployment

Analyze the impact of technological advancements on structural unemployment.

• It decreases structural unemployment by creating new jobs.

• It increases structural unemployment by making some skills obsolete.

• It has no impact on structural unemployment.

• It only affects cyclical unemployment.

Which of the following is a method used to measure inflation?

• Consumer Price Index (CPI)

• Gross Domestic Product (GDP)

• Unemployment Rate

• Net National Product (NNP)

Evaluate the effectiveness of using the Producer Price Index (PPI) as a leading indicator of inflation.

• PPI is not effective because it measures consumer goods.

• PPI is effective because it reflects changes in wholesale prices before they reach consumers.

• PPI is not effective because it only measures services.

• PPI is effective because it measures the stock market.

Identify the phase of the business cycle characterized by increasing economic activity and employment.

• Recession

• Trough

• Expansion

• Peak

Discuss the potential causes of a recession in the business cycle.

• High consumer confidence and spending

• Decrease in consumer demand and investment

• Increase in government spending

• Technological innovation

Which of the following is considered a leading economic indicator?

• Unemployment Rate

• Stock Market Returns

• Gross Domestic Product (GDP)

• Consumer Price Index (CPI)

Analyze how changes in interest rates can serve as a leading economic indicator.

• Lower interest rates typically indicate a slowing economy.

• Higher interest rates typically indicate an expanding economy.

• Changes in interest rates have no predictive value.

• Lower interest rates can stimulate borrowing and spending, indicating potential economic growth.