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Unit Two
Test Review
II. Nominal vs. Real GDP
• 4. Find the Nominal GDP of the year 2005.
II. Nominal vs. Real GDP
• 5. Find the Nominal GDP of 2001.
Years
Price Level
Quantity
2001
$400
80
2005
$440
82
II. Nominal vs. Real GDP
• 6. What is the percent change between the
GDP of 2001 and 2005?
Years
Price Level
Quantity
2001
$400
80
2005
$440
82
II. Nominal vs. Real GDP
• 7. What is the Real GDP of 2005?
II. Nominal vs. Real GDP
• 8. What is the percent change in Real GDP
between 2001 and 2005?
III. Unemployment
• 10. Given the following data, calculate the
unemployment rate for this economy:
Adult Population
Employed
Unemployed
180
150
10
III. Unemployment
• 11. Given the following data, calculate the
unemployment rate for this economy:
Adult Population
Employed
Unemployed
180
150
10
IV. Inflation and CPI
• 9. If the consumer price index for an
economy decreases from 115 to 95 in one
year, what is the percent decrease in
consumer prices for that year?
IV. Inflation and CPI
• 10. Give below are prices and quantities for a
basket of goods in two given years. Calculate
the market basket for year one.
Quantity
Price (Year One) Price (Year Two)
Item 1
10
$10
$10
Item 2
15
$6
$18
IV. Inflation and CPI
• 11. Given below are prices and quantities for a
basket of goods in two given years. Calculate
the market basket for year two.
IV. Inflation and CPI
• 12. Given below are prices and quantities for a
basket of goods in two given years. Calculate a
price index for year 2 using the following data
and year 1 as the base year.
V. Other Indexes
• 4. Suppose a nation produces only two
goods, pizza and soda. In 2015, 25 pizzas are
sold $5 each, and 12 sodas are sold at $2
each. If the price of pizza was $3 each and the
price of soda was $1 each in 2014, the base
year, then nominal 2015 GDP is…
V. Other Indexes
• 5. Suppose a nation produces only two
goods, pizza and soda. In 2015, 25 pizzas are
sold $5 each, and 12 sodas are sold at $2
each. If the price of pizza was $3 each and the
price of soda was $1 each in 2014, the base
year, then real 2015 GDP is…
V. Other Indexes
• 6. Suppose a nation produces only two
goods, pizza and soda. In 2015, 25 pizzas are
sold $5 each, and 12 sodas are sold at $2
each. If the price of pizza was $3 each and the
price of soda was $1 each in 2014, the base
year, then the GDP deflator is…
V. Other Indexes
• 7. If nominal GDP equals $5,000 and the GDP
deflator equals 200, then real GDP equals…
II. Nominal vs. Real GDP
• 1. Explain the process of finding real GDP.
I. GDP
• 3. The “total value of all goods and services
produced in the economy during a given year”
is referred to as what?
III. Unemployment
• 8. If you quit your job to move across the
country, which type of unemployment are you
experiencing?
VI. Causes and Consequences of
Inflation
• 1. What are two major costs of inflation?
I. GDP
• s the sale of stocks and bonds included in
GDP? Why or why not?
V. Other Indexes
• 1. Which index reacts quicker and more
drastically than all of the others?
I. GDP
• 6. Your parents paying you for doing your
chores would fall under which part of the
income approach?
I. GDP
• 7. A drug dealer buys a Snickers. Which part
of the expenditures approach would this fall
under?
I. GDP
• 8. The United States government starts a
program to buy back old cars. What effect
would this have on GDP given ceteris paribus?
VI. Inflation and CPI
• 8. What equation do we use to find the CPI?
I. GDP
• 9. Prices of the market basket increase as real
wages remain stagnate. Would GDP fall or rise
as a result if there is ceteris paribus in all other
aspects of the economy?
I. GDP
• 10. Interest rates on loans from most banks
decrease. What effect would this have on
GDP?
VI. Inflation and CPI
• 4. What group in the United States
government keeps track of consumer
purchases and inflation rates?
VI. Causes and Consequences of
Inflation
• 8. What is stagflation?
II. Nominal vs. Real GDP
• 2. Explain the process of find GDP per capita.
II. Nominal vs. Real GDP
• 3. Provide three examples of experiences
that GDP does not fully measure.
II. Nominal vs. Real GDP
• 9. What is the difference between GDP and
GNP?
III. Unemployment
• 1. What are the two qualifications you must
have to be considered unemployed?
III. Unemployment
• 2. How do you calculate the unemployment
rate?
VI. Inflation and CPI
• 7. What equation do we use to find the CPI?
III. Unemployment
• 3. Why are we likely to underestimate
unemployment?
I. GDP
• 2. Which phase of the business cycle is
marked by a decrease in unemployment and
an increase in GDP?
III. Unemployment
• 4. Are discouraged workers counted as
unemployed? Why?
III. Unemployment
• 5. Which two types of unemployment make
up the natural rate of unemployment?
VI. Causes and Consequences of
Inflation
• 2. Where does shoe and leather cost get its
name?
III. Unemployment
• 6. What type of unemployment occurs when
we are experiencing a recession or
depression?
VI. Causes and Consequences of
Inflation
• 10. How do expectations of consumers change
our economy?
III. Unemployment
• 7. Explain cyclical unemployment. Why is it
called “cyclical?”
I. GDP
• 1. Which phase of the business cycle is
marked by an increase in unemployment and
a decrease in GDP?
III. Unemployment
• 9. There is a lot of demand for welders in
California but Bill, an unemployed welder,
lives in New York. Bill is…
V. Other Indexes
• 2. What is the equation to find the GDP
Deflator?
III. Unemployment
• 12. How might changes in job searching
techniques impact the natural unemployment
rate?
VI. Inflation and CPI
• 6. What equation do we use to find the total
of a market basket?
VI. Inflation and CPI
• 5. Provide two reasons for why the market
basket is not always the best tool when
comparing purchases made by consumers in
two different years?
VI. Inflation and CPI
• 3. “A hypothetical set of consumer purchases
of goods and services,” is the definition of
what tool of measurement?
VI. Inflation and CPI
• 2. Why is it important for your real wage to
increase or decrease similarly with the
inflation rate?
VI. Inflation and CPI
• 1. “The percent change per year in the price
index—typically the price index,” is referring
to which tool of measurement?
V. Other Indexes
• 3. How would you use the GDP Deflator to
find real GDP when given Nominal numbers?
VI. Causes and Consequences of
Inflation
• 6. If a country is experiencing unusually high
depreciation of their dollar, they are
experiencing what?
VI. Causes and Consequences of
Inflation
• 5. What are demand-pull and cost push
inflation? Provide an example of each.
VI. Causes and Consequences of
Inflation
• 4. Who wins when interest is lower than
expected in fixed-rate loans? Why?
VI. Causes and Consequences of
Inflation
• 3. What is Fisher’s Hypothesis?
I. GDP
• 5. Your uncle buys an old Corvette. What part
of the expenditures approach would that
exchange fall under?
VI. Causes and Consequences of
Inflation
• 7. How have countries solved their issues
with hyperinflation in the past?
VI. Causes and Consequences of
Inflation
• 9. What two things did the new Federal
Reserve chairman do to resolve stagflation of
the late 1970’s?