Exam Review
Chapters 6 and 7
Use the following to answer question 1:
1. (Table: Calculating GDP) Using the information in the table provided, which of the
following is the correct calculation for GDP?
A) $47,475
B) $12,200
C) $21,485
D) $34,085
Use the following to answer question 2:
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2. (Table: Furniture Production Schedule) What is the total value added at all stages of the
production process of the furniture as described in the accompanying table?
A) $800
B) $1,200
C) $1,800
D) $2,000
3. Suppose a consumer buys a frozen cheese pizza at the grocery store for $10. The frozen
pizza company sold the pizza to the store for $5. The frozen pizza company purchased
the pizza dough and tomato sauce from a food processing company at a price of $2 and
bought the cheese from a dairy at a price of $1. How much has GDP increased?
A) $2
B) $5
C) $10
D) $18
Use the following to answer question 4:
4. (Table: Pizza Economy I) Based on the accompanying table, GDP in this economy is:
A) $73,000.
B) $65,000.
C) $57,000.
D) $51,000.
Use the following to answer question 5:
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5. (Table: Peanut Butter and Jelly Economy) A simple economy produces only peanut
butter and jelly. Using the data in the attached table, in 2011, nominal GDP was ____
and real GDP was _____.
A) $450; $400
B) $525; $450
C) $525; $400
D) $450; $575
Use the following to answer questions 6-7:
Table: The Consumer Price Index
6. (Table: The Consumer Price Index) The approximate rate of inflation in year 3 is:
A) 5%.
B) 10%.
C) 19%.
D) 20%.
7. (Table: The Consumer Price Index) The approximate rate of inflation in year 5 is:
A) 5%.
B) 10%.
C) 19%.
D) 20%.
Use the following to answer questions 8-9:
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8. (Scenario: Market Basket) What is the value of the price index in 2011?
A) 100
B) 90
C) 111
D) 132
9. (Scenario: Market Basket) What is the rate of inflation between 2010 and 2011?
A) –10%
B) 11%
C) 32%
D) 0%
10. The topics studied in macroeconomics include:
A) inflation.
B) monopolies.
C) spillovers like pollution.
D) mergers.
11. Which of the following is a microeconomic question rather than a macroeconomic
question?
A) Will a decrease in the income tax rate lift the nation out of a recession?
B) Will an increase in consumer spending create inflation?
C) Will a decrease in the income tax rate create a budget deficit?
D) Will an increase in the cigarette tax cause a decrease in the number of packs sold?
12. The modern tools of macroeconomic policy are:
A) tax policy and antitrust policy.
B) fiscal policy and monetary policy.
C) monetary policy and exchange rate policy.
D) capital policy and labor policy.
13. A business cycle is:
A) a very deep and prolonged economic downturn.
B) a period in which output and employment are rising.
C) a period in which output and employment are falling.
D) a short-run alternation between economic upturns and downturns.
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14. In a typical business cycle, the business-cycle trough is immediately followed by the:
A) business-cycle peak.
B) recession.
C) depression.
D) expansion.
15. For the past several months, per capita output has increased, but at a slower and slower
rate. Over the same period, the unemployment rate has been falling, but it appears to
have leveled off and may soon rise. Where in the business cycle is the economy?
A) the business-cycle peak
B) a recession
C) the business-cycle trough
D) an expansion
16. Which of the following would be classified as consumption?
A) a new computer purchased by Federal Express for one of its corporate executives
B) a storage facility for a moving company
C) a new car purchased by an employee of a company for personal use
D) a dump truck purchased by a demolition company
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Use the following to answer question 17:
Figure: Expanded Circular-Flow Model
17. (Figure: Expanded Circular-Flow Model) What is GDP in this economy?
A) $200
B) $700
C) $1,000
D) $1,080
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Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
B
B
C
B
B
A
D
C
B
A
D
B
D
D
A
C
C
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