the budget and current account deficits.

the Great Depression.

the productivity growth slowdown.

hyperinflation.

is cyclical.

measures the output that could be produced if the economy was fully employed.

measures the actual production from year to year.

Both answers A and C are correct

always equals potential GDP.

must always be less than potential GDP.

will always be greater than potential GDP because of the tendency of developed nations to incur inflation.

may be greater or less than potential GDP.

recession, trough, peak, expansion.

recession, trough, expansion, peak.

expansion, trough, peak, recession.

expansion, trough, recession, peak.

real GDP increases and usually unemployment falls.

real GDP decreases and usually unemployment falls.

real GDP decreases and usually unemployment rises.

real GDP increases and usually unemployment rises.

expansion

recession

peak

trough

as a percentage of the labor force.

as a percentage of the whole population.

who lost their jobs in the current year.

including discouraged workers.

indicated by a rise in the price level.

a general increase in the purchasing power of the monetary unit.

an economic condition which results in the waste of resources.

All of the above answers are correct.

deflation.

stagflation.

an increase in the price level.

hyperinflation.

the government spends money on things which do not produce revenue, such as schools.

the government miscalculated how much it will receive in taxes.

the economy goes into a recession.

the government spends more than it receives in taxes.

reduce the international deficit

stabilize the business cycle

reduce unemployment

All of the above answers are correct.

making changes in tax rates and changing the amount of money in the economy.

changing interest rates and government spending.

making changes in tax rates and government spending.

changing interest rates and changing the amount of money in the economy.

the Federal Trade Commission

the Interstate Commerce Commission

the U.S. Congress and the president

the U.S. Federal Reserve

number of final goods and services produced in the economy in a given time period.

market value of old and new final goods and services sold in the economy in a given time period.

number of final goods and services sold in the economy in a given time period.

market value of final goods and services produced in the economy in a given time period.

the premise of the question is incorrect because intermediate goods are directly included in calculating GDP.

their inclusion would involve double counting.

their inclusion would understate GDP

they represent goods that have never been purchased so they cannot be counted.

are running a trade surplus.

must borrow an equal amount from the rest of the world.

are helping to finance investment in the rest of the world.

can lend an equal amount to the rest of the world.

private saving, government budget deficits and borrowing from the rest of the world.

private saving and borrowing from the rest of the world only.

private borrowing, government budget deficits and lending to the rest of the world.

private saving, government budget surpluses and borrowing from the rest of the world.

purchase of stocks and bonds.

purchase of raw land for later resale.

purchase of equipment, plants, and inventories.

difference between people’s income and their spending.

gross investment plus depreciation.

capital consumption plus depreciation.

depreciation minus the amount of gross investment.

gross investment minus depreciation.

the part of investment that is equal to all the existing capital stock.

equivalent to the value of factors purchased by producers.

included in net interest in the income approach to calculating GDP.

the decrease in the value of capital from wear and tear.

the exclusion of household production

the inclusion of government purchases

the exclusion of government transfers

All of the above cause reported GDP to be less than total production.

young and institutionalized

working-age population

labor force

not in the labor force

lower the reported rate.

increase the reported rate.

not change the reported rate.

change the reported rate, but in an unpredictable manner.

people losing their jobs.

people entering or reentering the labor force.

people voluntarily quitting their jobs.

All of the above answers are correct.

frictional, part-time, and involuntary.

voluntary, part-time, and cyclical.

voluntary, involuntary, and structural.

frictional, structural, and cyclical.

the individual quits a job in order to search for a better one.

the individual wants to work just during certain months of the year.

the individual lacks marketable job skills because technology has changed.

there is a recession and the individual is laid off.

there is no cyclical or frictional unemployment.

no one is unemployed.

there is no cyclical unemployment.

there is no structural or frictional unemployment.

total expenditures.

aggregate demand curve.

real wealth effect.

aggregate supply curve.

at full employment prices are stable.

the money wage rate increases faster than the price level.

potential GDP is independent of the price level.

there is no cyclical inflation.

becomes steeper.

shifts leftward.

shifts rightward.

remains as it is.

consumption expenditures to decrease.

a movement along the aggregate demand curve.

a wealth effect.

All of the above answers are correct.

a change in expectations about future income

a change in fiscal policy

a change in monetary policy

an increase in technology

an increase in the quantity of money

an increase in the exchange rate

an increase in the tax rate

a decrease in the price level

real GDP equals potential GDP.

real GDP cannot be equal to potential GDP.

real GDP can be greater than, less than, or equal to potential GDP.

nominal GDP equals potential GDP.

when the rate at which prices increase equals the rate at which resource prices increase.

at the intersection of the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate demand curve.

at the intersection of the short-run aggregate supply curve and the aggregate demand curve.

at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve.

nominal GDP is less than potential GDP.

high rates of inflation occur.

real GDP is below potential GDP.

nominal GDP is above potential GDP.

the equilibrium in which the economy is in most of the time.

the period of time when prices are falling.

the short-term period when real GDP exceeds potential GDP.

theoretical possibility but cannot happen in reality.

SAS; rightward

AD; rightward

SAS; leftward

AD; leftward

the same as a real variable.

always measured by subtracting the inflation rate from the real variable.

a variable which measures the standard of living.

a variable that has not been adjusted for changes in inflation.

being at the point where the marginal product of labor equals zero.

labor demand being higher than labor supply and real GDP being equal to potential GDP.

equilibrium in the labor market, and real GDP exceeding potential GDP.

equilibrium in the labor market, with real GDP being equal to potential GDP.

the rate paid when the best customers of banks borrow money

the nominal interest rate plus the inflation rate

the nominal interest rate minus the inflation rate

the nominal interest rate minus the growth rate of GDP

credit cards

checks in the checkbook

checking deposits

All of the above are money.

M2 is a stock variable while M1 is a flow variable.

M1 is a stock variable while M2 is a flow variable.

traveler’s checks are part of M1.

time deposits and savings deposits are included in M2.

The ratio is only enforced against banks that are operating in a risky manner.

The ratio determines the amount of excess reserves a bank must hold.

The ratio determines the legally required amount of reserves a bank must hold.

None of the above answers is correct.