Professional Documents
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4.Suppose nominal GDP in 1996 was $100 billion and in 1998 it was $260 billion. The
general price index in 1996 was 100 and in 1998 it was 180. Between 1996 and 1998 the
real GDP rose by:
160 percent.
44 percent.
37 percent.
12 percent.
A)
B)
C)
D)
5.Over a year, a nation's GDP at current prices rose by 15 percent while the price index
increased from 100 to 110. GDP at constant prices rose by about:
3 percent.
5 percent.
7 percent.
9 percent.
A)
B)
C)
D)
6.The phase of the business cycle in which real domestic output declines is called:
the peak.
an expansion.
a recession.
the trough.
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15.Kevin has lost his job in an automobile plant because of the use of robots for welding on
the assembly line. Kevin plans to go to technical school to learn how to repair
microcomputers. The type of unemployment Kevin is faced with is:
cyclical.
frictional.
structural.
natural.
A)
B)
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D)
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18.If the natural rate of unemployment was 6 percent, the current unemployment rate was 12
percent, and the nominal GDP was $4,000 billion, then according to Okun's law the
economy would have sacrificed:
$240 billion in potential output.
$480 billion in potential output.
$700 billion in potential output.
$840 billion in potential output.
A)
B)
C)
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20.If the Consumer Price index rises from 300 to 333 in a particular year, the rate of
inflation in that year is:
11 percent.
33 percent.
91 percent.
10 percent.
A)
B)
C)
D)
21.Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer
price index rises from 100 to 105. The person's real income will:
fall by about 20 percent.
fall by about 2 percent.
rise by about 15 percent.
rise by about 25 percent.
A)
B)
C)
D)
A)
B)
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23.Recently a teachers' union argued that the standard of living of teachers working for the
school district was falling. The negotiating team for the school board replied that this was
not true because the teachers had received significant increases in nominal income
through collective bargaining. Could the union statement be correct?
No, because real income may rise if price increases are proportionately greater than
the increases in nominal income.
Yes, because real income may fall if price increases are proportionately smaller than
the increases in nominal income.
Yes, because real income may fall if price increases are proportionately greater than
the increases in nominal income.
No, because real income may rise if price increases are proportionately greater than
declines in income.
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Answer Key
1.A
2.C
3.C
4.B
5.B
6.C
7.C
8.D
9.A
10.A
11.C
12.D
13.B
14.C
15.C
16.C
17.B
18.B
19.B
20.A
21.C
22.A
23.C
24.C
25.C
26.B
27.A
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