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UNIT FIVE SAMPLE TEST Q'S Answer Section MULTIPLE CHOICE 1. ANS: C The GDP (gross domestic product) is the dollar value of all final goods produced within a country’s borders in a given year. TOP: Economic Performance | Gross Domestic Product 2. ANS: A Real GDP expresses GDP in constant prices, allowing for price changes and making it easier to measure changes in economic performance over time. TOP: Economic Performance | Real GDP 3. ANS: B Frictional unemployment occurs when people take time to find a job. TOP: Unemployment | Frictional Unemployment 4. ANS: D Economists generally agree that an unemployment rate of 4 to 6 percent is normal and full employment exists when cyclical unemployment is eliminated. TOP: Unemployment | Full Employment 5. ANS: A The disparity between the rich and the poor has increased. TOP: Poverty | Income Distribution 6. ANS: A Real GDP expresses GDP in constant prices, allowing for price changes and making it easier to measure changes in economic performance over time. TOP: Economic Performance | Real GDP 7. ANS: D A recession is a long economic contraction of at least six straight months. TOP: Business Cycle | Recession 8. ANS: D Technological progress is an increase in efficiency gained by producing more output without using more input. The increased productivity from new technology is called technological progress. TOP: Economic Growth | Technology 9. ANS: D The quantity theory holds that inflation is caused by the existence of too much money in the economy. TOP: Inflation | Quantity Theory 10. ANS: B National income accounting is the collection and organization of macroeconomic statistics. This information is used by policymakers to analyze economic health and guide government action. TOP: Economics | Gross Domestic Product and Growth