1. Which of the following statements is correct?
a. Real GDP is the total market value of the final goods and services produced in America for sale in a year valued in the prices of 1992.
b. Your buying stock in the stock market is an example of investment spending
c. Potential Real GDP is always greater than Equilibrium Real GDP
d. Social security and welfare are examples of spending on infrastructure.
e. All of the above
2. The period of the business cycle in which real GDP is increasing is called the:
a. expansion b. peak c. recession d. trough e. stagflation
3. Assume that, in the population, 95 million people worked for pay last week, 5 million people did not work for pay but had been seeking a job, 5 million people did not work for pay and had not been seeking a job for the past several months, and 45 million were under age 16. The unemployment rate, given these numbers, is:
a. 5% b. 8% c. 10% d. 20% e. 45%
4. A type of unemployment in which workers are in-between jobs or are searching for new and better jobs is called _______ unemployment:
a. frictional b. cyclical c. structural d. turnover
5. Consider three consumer goods: 100 of Good A, 100 of Good B, and 100 of Good C. In the base year, Good A sold at a price of $1, Good B sold at a price of $1, and Good C sold at a price of $1. In the current year, Good A sold at a price of $3, Good B sold at a price of $5, and Good C sold at a price of $10. The Consumer Price Index (CPI) for the current year is:
a. 100 b. 300 c. 500 d. 600 e. 1000