5. Which of the following is true of nominal GDP?
a. It acts as an indicator of the general price level in the
economy
b. It measures the real level of output in the economy
c. It measures national output based on the current year's
prices
d. It tends to rise by a smaller amount than real GDP when the
general price level increases
e. It measures changes in the output of intermediate goods and
services
6. Because there is no way to account for them, the official
unemployment rate does not include discouraged workers. What would
happen to the unemployment rate if, because of a program that gave
them new hope, all discouraged workers suddenly begin reporting
themselves as ready to work?
a. The official unemployment rate would remain unchanged
b. The size of labor force would increase
c. The size of labor force would remain unchanged
d. The official unemployment rate would decrease
e. The size of the underground economy would shrink
7. Assume you borrow $1,000 on credit cards at an annual
interest rate of 10 percent. If the inflation rate is 12 percent
during the year and the debt has to be paid back in 12 months,
then:
a. income will be redistributed from you to the bank
b. the real return for the bank will be greater than initially
expected
c. you will repay the bank with fewer dollars than you
borrowed
d. the dollars repaid will have less purchasing power than
those borrowed
e. the bank will obtain the same return on the loan as
initially expected
8. Some economists say that "full employment" exists in an
economy where:
a. cyclical unemployment is 2 percent
b. cyclical unemployment is 4 to 6 percent
c. frictional unemployment is zero
d. the unemployment rate is 4 to 7 percent
e. the natural unemployment rate is zero