1.
Which of the following is deducted from National Income to get
Personal Income:
A. personal taxes
B. transfer payments
C. indirect business taxes
D. income currently earned, but not yet received
E. income received, but not currently earned
2. What is deducted from Gross Investment to get Net
Investment:
A. income taxes
B. depreciation expenditure
C. the purchase of all existing shares of stock
D. foreign direct investment (i.e. investment from other
countries in our country)
E. none of the above
3. Higher GDP does not necessarily mean we're better off
because:
A. higher real GDP could be the result of an increase in the
price level, not output
B. higher real GDP could be the result of an increase in the
underground economy
C. higher real GDP could be the result of our replacing
infrastructure damaged in natural disasters
D. higher real GDP could be the result of companies selling
more used goods
E. higher real GDP (e.g. in the U.S.) could be the result of
greater U.S. investment in other countries
4. Which of the following would be the best example of
frictional unemployment?
A. when the workers quit their jobs to search for a higher
paying job
B. when the workers who produced Ford Explorers are laid off
as the economy enters recession
C. when the employees at a store selling Christmas decorations
are laid off after the holiday
D. when the workers are laid off due to an increase in the
minimum wage
E. none of the above
5. Which of the following would be the best example of
cyclical unemployment?
A. when the workers quit their jobs to search for a higher
paying job
B. when the workers who produced Ford Explorers are laid off
as economy enters a recession
C. when the employees at a store selling Christmas decorations
are laid off after the holiday
D. when the workers are laid off due to an increase in the
minimum wage
E. none of the above
Use the following information for questions 6-8
The economy Country ex has the following individuals (assume
no overlap across categories)
-Number of people out of work, who are actively seeking a job:
50
-Number of people who are retired: 120
-Number of people who are institutionalized: 100
-Number of people who are employed with a full-time job:
600
-Number of people who are employed with a part-time job:
150
-Number of people who are discouraged workers: 100
6. What is the size of this economys labor force?
A. 50
B. 750
C. 800
D. 900
E. 1020
7. What is this economys current unemployment rate?
A. 6.25%
B. 6.67%
C. 5.56%
D. 16.67%
E. 20.00%
8. What is this economys current participation rate?
A. 73.53%
B. 88.89%
C. 71.43%
D. 78.43%
E. 88.24%