1-Assuming no international sector (i.e. a closed

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Assuming no international sector (i.e. a closed

economy), what is the Nominal GDP for Year 4?

A.10.925 trillion USD

B.10.674 trillion USD

C.11.033 trillion USD

D.11.086 trillion USD

2-Assuming no international sector (i.e. a closed economy), what is the Real GDP for Year 2?

A.11.033 trillion USD

B.10.925 trillion USD

C.10.674 trillion USD

D.11.086 trillion USD

3-Which of the following would be included in GDP?

A.Social security payment

B.Fred tutors Barney’s kids in exchange for Barney driving the kids to school

C.Government purchases new books for a school

D.Tim sells his current house

4-Of the following, which is not a real variable?

A.the wage rate divided by price level


C.the price level

D.nominal GDP divided by the price level

5-At potential GDP,

A.the real wage rate must be rising because other- wise people will not work.

B.the labor market is in equilibrium so that the quantity of labor demanded equals the quantity supplied.

C.the labor market might or might not be in equilibrium.

D.the real wage has adjusted so that it equals the money wage.

6-Suppose that, all else equal, technology increases, we would expect that the potential GDP would be affected by

A.Shifting the demand curve to the left in Panel A

B.Shifting the supply curve to the left in Panel C

C.Shifting the production function upward in Panel B

D.Shifting the demand curve to the right in Panel A


In the FEM, if AD shifts because G increases we expect:

A.Price levels to fall but output to increase

B.Price levels and output increase

C.Output does not change but price levels increase

D.Output to increase but price levels fall

One of the major political issues of the day is immigration. Suppose that the US barred all immigration (legal and illegal). Which panel best describes this situation?

A.Both Panel A and Panel B

B.Neither Panel A nor Panel B

C.Panel A

D.Panel B

9-Suppose the wage on the vertical axis refers to the real wage, at P1 which statement is true?

A.Firms wish to hire fewer workers which leads to full employment.

B.Firms wish to hire more labor than workers are willing to supply which will lead to an increase in the real wage.

C.Workers wish to supply more hours of work than firms are willing to buy leading to unemployment.

D.Full employment will occur but there will be a surplus of workers.

10-The change in Panel A could be a result of:

A.An increase in the labor force participation rate

B.An increase in the capital stock

C.Emigration of workers out of the economy

D.A decrease in technology

Billions of USDYearConsumption InvestmentGovernmentGDPPriceGDP(C)(I)Spending (G)(Nominal)IndexReal (1)7.7231.3241.986100.007.8391.3442.016102.507.8781.3512.02699.507.7601.3301,995101.507.6441.3101,965102.30Notes:(1) Real GDP = Nominal GDP = (Price Index/100)Real GDP is calculated in Year 1 dollars


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