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Which statement is true about the circular flow diagram of an economy?
The market for goods and services connects household spending to government spending.
The market for factors of production connects household spending to goods produced by firms.
The market for factors of production connects spending by firms to household income.
The market for goods and services connects labor income to firms as employers.
The market for goods and services connects labor income to household spending.
Which statement is true about the approaches used to measure the value of a nation’s gross domestic product ?
The expenditures approach to calculating sums the components of the supply side of the economy.
The income approach to calculating sums the income earned by the factors of production excluding profits.
The value-added approach to calculating sums the final monetary value of output at each stage of production.
The expenditures approach to calculating sums the market value of all final goods and services produced by foreigners in a given period of time.
The expenditures approach to calculating sums consumption spending, investment spending, government spending, and net exports.
Country X’s Macroeconomic Data in 2017
Calculate Country X’s nominal gross domestic product for 2017 using the expenditures approach.
14 billion dollars
18 billion dollars
19 billion dollars
20 billion dollars
21 billion dollars
Which of the following describes a limitation of gross domestic product ?
It overstates the value of output by counting non-market transactions such as mowing your neighbor’s lawn.
It understates the value of output by accounting for negative environmental side effects of production.
It does not account for the distribution of income in a nation or income inequality.
It overstates economic well-being by including all do-it-yourself activities.
Which of the following is true about gross domestic product ?
Calculations of include the monetary value of non-market production activities such as households preparing their own meals at home.
Calculations of do not include the monetary value of production activities.
Calculations of include the monetary value of illegal production activities such as drug cartels.
Calculations of include the sale of used goods.
As a measure of economic performance, the United States gross domestic product accounts for which of the following?
The use of open-source, free Web browsers
A parent’s care of children in the home
The street sale of illegal substances
The cleanup of an oil spill
The production of vegetables grown in the backyard and consumed by the family
Which of the following is classified as a discouraged worker?
Javier earned a degree in business and is actively seeking a job in the financial sector.
Sara has been unable to find a job and abandoned her job search.
Raphael decided to be a stay-at-home dad after he lost his job.
Ida was laid off during a downturn in the economy and is looking for a new job.
Zack volunteers at the local elementary school all year long.
What type of unemployment describes the situation of factory workers displaced by automation?
Cyclical
Frictional
Natural
Seasonal
Structural
Given the labor market data above, what are the labor-force participation rate and the unemployment rate ?
The is 60% and the is 6.0%.
The is 54% and the is 6.0%.
The is 54% and the is 10.0%.
The is 60% and the is 10.0%.
The is 60% and the is 3.3%.
Suppose the consumer price index was 100 on January 1st, 2017 and 110 on January 1st, 2018 with no changes in nominal wages. Which of the following is definitely true about the economy between January of 2017 and January of 2018?
The inflation rate was 10 percent.
The inflation rate was percent.
Real wages increased by 10 percent.
There was disinflation of 10%.
Nominal decreased by 10 percent.