Why were cell phones not included in the CPI basket immediately after it was
introduced?
A) Most American families did not have cell phones when they were first introduced.
B) The cell phones were all made in Japan, so they were not included in GDP.
C) Only one kind of phone can be included in the CPI basket, and in 1983, they were
the landline phones.
D) All of the above are correct.
Recall Application 3, “Are They Really Dumping?” to answer the following questions:
According to the application, how does the Department of Commerce determine the
price of the good in the foreign market?
A) They use a “constructed value” method where it makes its own estimates of what
prices in countries’ own markets would be based on available data.
B) They use dated and very crude estimates.
C) They rely on the information supplied by the firms that bring about the charges.
D) All of the above are correct.
Suppose that the natural rate of unemployment is 5% and the current inflation rate is
1% per year. To bring the inflation rate down to zero, the actual unemployment rate in
the economy would have to be:
A) 6%.
B) 4%.
C) 8%.
D) 7%.
In Figure 11.1, a decrease in consumer wealth is represented by a change in the
consumption function from
A) to .
B) to .
C) to .
D) to .
The relationship between the level of prices and total quantity of goods and services
producers are willing to supply is represented by the
A) aggregate demand curve.
B) aggregate supply curve.
C) sticky price curve.
D) GDP multiplier.
During recessions, government spending usually:
A) decreases because transfer payments decrease.
B) increases because transfer payments increase.
C) decrease because transfer payments increase.
D) increase because transfer payments decrease.
Identify which of the following item(s) would be included in U.S. GDP:
(a) the salary of an American consultant hired by a British firm to go to Europe and
analyze their operations there.
(b) the output of a U.S.-owned family farm in Kansas.
(c) food stamp payments.
(d) welfare checks.
(e) the wages of a field worker in Louisiana.
With a fixed exchange rate system, the balance of payments of a country:
A) can be zero, positive or negative.
B) is always positive.
C) always equals zero.
D) is always negative.
The velocity of money is calculated as the ratio of:
A) real GDP to the money supply.
B) the overall price level to the money supply.
C) nominal GDP to the money supply.
D) nominal GDP to the overall price level.
Figure 9.1 shows three aggregate demand curves. A movement from curve AD2 to curve
AD1 could be caused by a(n)
A) increase in the money supply.
B) increase in taxes.
C) increase in the price level.
D) increase in government spending.
The largest category of entitlements and mandatory federal spending is:
A) mean-tested farm price supports.
B) Social Security.
C) Medicare.
D) Medicaid.