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AP Macroeconomics Unit 2: Economic Indicators and the Business Cycle

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Unit 2: Economic Indicators and the Business Cycle

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Question 1

Which of the following is NOT a limitation of GDP as a measure of economic well-being?

A.GDP excludes the value of household production and volunteer work.B.GDP measures total market value of all final goods and services produced.C.GDP does not account for income distribution or inequality.D.GDP includes spending on pollution cleanup, which may reflect harm rather than welfare.

Question 2

Which phase of the business cycle is characterized by falling real GDP, rising unemployment, and decreasing business investment?

A.ExpansionB.PeakC.Recession (contraction)D.Trough

Question 3

A worker loses her job at a coal mine because the nation has shifted to renewable energy, making coal uneconomical. This worker is experiencing which type of unemployment?

A.Frictional unemploymentB.Cyclical unemploymentC.Structural unemploymentD.Seasonal unemployment

Question 4

A market basket costs $200 in the base year and \$ 230 in the current year. The CPI in the current year is closest to:

A.115B.130C.87D.100

Question 5

The natural rate of unemployment consists of which two types of unemployment?

A.Cyclical and structural unemploymentB.Frictional and structural unemploymentC.Frictional and cyclical unemploymentD.Seasonal and structural unemployment

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Question 6

The CPI in Year 1 is 120 and in Year 2 is 126. A worker earned a nominal wage of $50,000 in Year 1. What nominal wage in Year 2 is required to maintain the same purchasing power?

A.$52,500B.$50,000C.$53,000D.$54,600

Question 7

During the expansion phase of the business cycle, which combination of macroeconomic trends is most likely?

A.Rising real GDP, falling unemployment, rising inflationB.Rising real GDP, rising unemployment, falling inflationC.Falling real GDP, falling unemployment, rising inflationD.Stable real GDP, stable unemployment, stable prices

Question 8

A country's GDP is $500 bi l l i o ninY e a r 1 an d$ 550 billion in Year 2, both measured in Year 1 prices. The general price level rose 4% between Year 1 and Year 2. What is the real GDP growth rate?

A.4%B.10%C.6%D.14%

Question 9

The labor force participation rate is 60% and the unemployment rate is 5%. If the working-age population is 200 million, how many people are unemployed?

A.6 millionB.10 millionC.3 millionD.12 million

Question 10

Which of the following is counted in U.S. GDP using the expenditure approach?

A.A used car sold at a dealership for $8,000.B.A new house built and purchased by a family for $300,000.C.A Social Security payment of $1,200 received by a retiree.D.Steel purchased by Ford to manufacture new cars.

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Question 11

Nominal GDP in Year 2 is $800 billion. The GDP deflator for Year 2 is 125 (base year = 100). What is real GDP in Year 2?

A.$1,000 billionB.$640 billionC.$675 billionD.$800 billion

Question 12

Real GDP per capita in Country A rose from $40,000 to \$ 42,000 over ten years. The population grew from 10 million to 12 million over the same period. Which statement best evaluates living standards?

A.Living standards rose because total real GDP increased.B.Living standards rose modestly — real GDP per capita increased 5% over a decade.C.Living standards fell because population grew faster than real GDP.D.Living standards cannot be assessed without knowing the unemployment rate.

AP Macroeconomics Unit 2: Economic Indicators and the Business Cycle — Free with Answer Explanations | Test Practice Hub