macro exam 2 practice

Topics: Economics, Unemployment, Macroeconomics Pages: 3 (778 words) Published: November 1, 2014

ECO 2013: Principles of Macroeconomics
Midterm 2 Practice Questions
1. GDP (Gross Domestic Product) is …
A. the sum of consumption, investment, government purchases, and net exports.
B. the market value of final goods and services produced in an economy during a year.
C. the market value of final goods and services produced an
Economy’s citizens and firms during a year.
D. A and B
E. All of the above
2. The largest component of GDP is…
A. consumer spending.
B. private investment.
C. government purchases.
D. transfer payments.
E. net exports.
3. Potential GDP is…
A. always different from real GDP.
B. another name for real GDP.
C. achieved when all factors of production are fully employed. D. the level of GDP not adjusted for price changes.
4.Real GDP may be criticized as a measure of economic welfare, because it… A. does not take account of the degradation of environmental quality. B. does include leisure time enjoyed by a society.

C. does not include the value of products produced within the household. D. A and B
E. All of the above
5.In an economy, 42 million people are in the labor force, 38 million people are employed, and 47 million people are of working age. How many people are NOT in the labor force? A. 4 million
B. 5 million
C. 9 million
D. 19 million
E. There is too little information.
6.Suppose the population of Knightland is 100 people, and that the working age population is 70 people. If 10 of these people are unemployed, what is the labor force participation rate of Knightland? A. 60%

B. 70%
C. 90%
D. 100%
E. There is too little information.
7.In August 2012, the labor force participation rate dropped from 63.7% to 63.5%. This change could have been caused by… A. unemployed workers giving up looking for a job.
B. full-time workers becoming part-time workers.
C. unemployed workers getting full-time jobs.
D. discouraged workers starting to look for jobs again.
8.Unemployment caused by normal...
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