Download Unit III Practice Test

Unit IV Practice Test
(1) If people start spending less, then what is likely to happen to GDP and the
unemployment rate?
A
B
C
D
GDP will increase, but the unemployment rate will decrease.
GDP will decrease, but the unemployment rate will increase.
GDP and the unemployment rate will both decrease.
GDP and the unemployment rate will both increase.
(2) If people start spending more, then what is likely to happen to the rate of
inflation?
A
B
C
D
The inflation rate will increase.
The inflation rate will decrease.
Prices are not influenced by consumer spending.
The inflation rate is impossible to predict.
(3) This measure of the prices of 90,000 consumer goods is used to measure
inflation.
A
B
C
D
GDP
PPI
CPI
Reserve Requirement
(4) Which of the following are included in calculating GDP?
A
B
C
D
consumer spending, taxes, interest charges, exports
consumer spending, purchases of capital goods, government spending, and net exports
consumer spending, secondhand sales, the underground economy
consumer spending, inflation, the unemployment rate
(5) Which of the following would most likely lead to an increase in GDP and a
decrease in the unemployment rate?
A
B
C
D
an increase in interest rates
an increase in CPI
an increase in inflation
an increase in aggregate supply
(6) If CPI was at $120 in 2004 and is at $125 now, then what would be the rate of
inflation since 2004?
A
B
C
D
3.4%
4.2%
5.0%
25%
(7) Bobby loses his job because the economy is bad. What type of unemployment
does this example represent?
A
B
C
D
cyclical
frictional
seasonal
structural
(8) What is the key difference between a recession and a depression?
A
B
C
D
Recessions last longer.
Recessions have higher levels of unemployment.
Depressions are more severe and last longer.
Depressions are more common.
(9) What is the phase of the business cycle where GDP is growing and the
unemployment rate is declining?
A
B
C
D
depression
expansion
recession
trough
(10) Which of the following will lead to a higher national debt?
A
B
C
D
lower net exports
higher net exports
a decrease in government deficits
an increase in government deficits
(11) The Federal Reserve (The Fed) is owned and run by whom?
A
B
C
D
owned and controlled by the people
owned by member banks and publically controlled
controlled by member banks and owned by shareholders
controlled and owned by the government
(12) The Feds ability to control the amount of money in circulation in order to
manage the economy is known as
A
B
C
D
fiscal policy
monetary policy
taxing
spending
(13) What is the Federal Reserve likely to do if the inflation rate begins to grow
too quickly?
A
B
C
D
cut the reserve requirement and the discount rate, while buying government securities
increase taxes and decrease government spending
increase the reserve requirement and the discount rate, while selling government securities
the Fed will use easy money policy to decrease the money supply
(14) Which of the following would the Fed likely do to reduce the unemployment
rate?
A
B
C
D
reduce the rate of inflation
increase the reserve requirement
increase the discount rate
reduce the discount rate
(15) What do we call the government’s ability to manipulate the economy using
taxing and spending?
A
B
C
D
fiscal policy
monetary policy
open market operations
GDP
(16) What could the government do to promote a higher GDP and a lower
unemployment rate?
A
B
C
D
increase spending and taxes
decrease spending and taxes
increase spending and decrease taxes
decrease spending and increase taxes
(17) What could the government do to stabilize prices during a time of high
inflation?
A
B
C
D
increase spending and taxes
decrease spending and taxes
increase spending and decrease taxes
decrease spending and increase taxes
(18) The unemployment rate is computed by
A
B
C
D
dividing the number of employed people by the number of unemployed people
subtracting the number of unemployed workers from the population
dividing the civilian labor force by the nations total population
dividing the number of unemployed workers by the civilian labor force
Unit IV Practice Test
(1) Answer: B – Topic: Consumer Spending’s Impact on GDP, Inflation, and Unemployment
(2) Answer: A – Topic: Consumer Spending’s Impact on GDP, Inflation, and Unemployment
(3) Answer: C – Topic: Consumer Price Index
(4) Answer: B – Topic: Calculating GDP
(5) Answer: D – Topic: Aggregate Supply and Aggregate Demand
(6) Answer: B – Topic: Calculating Inflation
(7) Answer: A – Topic: Types of Unemployment
(8) Answer: C – Topic: Recessions and Depressions
(9) Answer: B – Topic: Phases of the Business Cycle
(10) Answer: D – Topic: National Debt and Government Deficits
(11) Answer: B – Topic: The Structure of the Federal Reserve
(12) Answer: B – Topic: Monetary Policy
(13) Answer: C – Topic: Monetary Policy
(14) Answer: D – Topic: Tools of the Fed
(15) Answer: A – Topic: Fiscal Policy
(16) Answer: C – Topic: Fiscal Policy
(17) Answer: D – Topic: Fiscal Policy
(18) Answer: D – Topic: Calculating the Unemployment Rate