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National Economy Exam

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Last updated 20 days ago
43 questions
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1989 2022
Nominal GDP $5.7 trillion $34.6 trillion
Real GDP $9.2 trillion $19.8 trillion
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Question 32
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The proposal is the biggest budget in recent history, reflecting the massive government spending plans Biden rolled out this spring in his push to bolster the middle class and make the United States more competitive with China:
— his $1.5 trillion discretionary budget, which would increase funding for education, the IRS and the Centers for Disease Control and Prevention, among other things;
— the $2.3 trillion American Jobs Plan investing in infrastructure, currently under negotiation with Congress; and
— the $1.8 trillion American Families Plan, which includes spending on universal preschool and two years of free community college.

Source:https://www.npr.org/2021/05/28/1000843544/biden-proposes-a-huge-hike-in-government-spending-in-a-6-trillion-budget
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Question 1
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Question 2
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Why do economists calculate GDP?
To help end poverty
To understand why unemployment happens
To look at the wealth of nations
To explain why inflation happens
Ford is an American car company. Honda is a Japanese car company. Which of the following items would not be included in the American GDP for 2023?
A Honda made in a factory in Marysville, Ohio
A Jeep made by immigrant workers in Belvidere, Illinois
A Ford made in a factory located in Hermosillo, Mexico
A Chevy made in a factory located in Flint, Michigan
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Question 6
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Question 7
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As anticipated, the ticket prices for the home finale for Coach K [legendary Duke coach] are through the roof. According to Front Office Sports, the game between [Duke] and [their biggest rival UNC] is trending towards being the highest-selling game between the teams in StubHub history.

The current minimum ticket price is $3,690. The average price on StubHub is $5,392. Given Coach K’s storied career, it is no surprise that fans are willing to pay top-dollar to witness history in his final home game coaching [Duke].

Source: https://www.si.com/college/2022/02/28/mike-krzyzewski-last-duke-home-game-ticket-prices-north-carolina
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Question 14
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Oil is refined and made into gasoline. If the price of oil increases from $47 per barrel to $50 per barrel, it is likely the price of gas will increase.

This is an example of
sanctions
money supply inflation
cost push inflation
demand pull inflation
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Question 21
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Which of the following would NOT be considered in the labor force?
A 32 year old plumber looking to change careers
A 17 year old working as a cashier at ShopRite
an unemployed 26 year old who is looking for a teaching job
A 22 year old college grad who plays video games his parent’s basement all day
A teacher loses his job in a school district. He is applying to available jobs in other districts. He is considered
Marginally unemployed
Undesirable worker
Out of the labor force
Frictionally unemployed
A Blockbuster employee loses his job because people began streaming videos over the internet on Netflix. He is considered
Out of the labor force
Undesirable worker
Structurally unemployed
Marginally unemployed
During the Great Depression, thousands of factory workers lost their jobs because there was no demand for labor. Economists identified these people as:
Hobos
Excessive Workers
Migrant labor
Cyclically unemployed
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Question 31
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Which of these policies would not slow down the economy?
Decreasing interest rates
Increasing the discount rate
Decreasing government spending
Increasing taxes
A fast growing economy can lead to
Unemployment
Inflation
Higher Interest Rates
Lower GDP
GDP = C + I + G + (X-M)

C = Consumer Spending
I = Investment
G = Government Spending
X-M = Net Exports (Exports minus Imports)
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Question 43
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Why is there a significant difference between the nominal GDP and the real GDP in 2022?
The real GDP is real and the nominal GDP is fake information
Nominal GDP doesn’t include public feeling about the economy, but real GDP does.
The real GDP is including inflation, but the nominal does not
The nominal GDP includes goods made in other countries, but the real GDP only includes goods made in America.
If you want to compare GDP from two different periods of time, what should you use?
Business Cycle
Nominal GDP
Real GDP
Velocity of Money
What is the discount rate?
The rate the Federal Reserve charges for loans to commercial banks
The rate new businesses are allowed to open
How much the bank reduces your debt if you pay early
The rate a car dealership charges on an auto loan
In 2020, the discount rate dropped significantly. The discount rate is decreased because
The Fed wants to speed up the economy to lower unemployment.
The Fed wants to lower inflation and slow down the economy
The Fed wants to encourage more goods produced instead of services
The Fed wants to increase imports instead of exports
Recent news indicates that the Fed wants to increase the discount rate. This indicates that
The Fed wants to encourage more goods produced instead of services
The Fed wants to slow down the economy and lower inflation
The Fed wants to speed up the economy to lower unemployment.
The Fed wants to increase imports instead of exports
The average price for a home Duke basketball game is approximately $265. What type of inflation is demonstrated in the article?
Money supply inflation
Entertainment inflation
Cost - push inflation
Demand - pull inflation
If the ticket prices in this article went up because of cost - push inflation, a possible explanation could be:
The Duke basketball game was the only game played on that day
Duke and North Carolina are bitter rivals so everyone wants to go
Duke had its first losing season in 30 years
Duke built a new expensive arena which makes it more expensive for Duke to have a basketball team
Demand-pull inflation can be considered a positive sign because it indicates that
It happens when consumers expect the economy to decline
It only happens when America has a trade surplus
The cost to make things is getting higher
People have more money so they want to buy more things
If Duke expanded the seating capacity of their home court, Cameron Indoor Stadium, from the current 9,314 to the same size of UNC’s Dean Smith Center which has a capacity of 21,750 what would you expect to happen to the average price of Duke basketball tickets?
Decrease supply of tickets would make average price go down
Decrease supply of tickets would make average price go up
Increase supply of tickets would make average price go down
Increase supply of tickets would make average price go up
The same cup of coffee increased from 25 cents to $1.59 between 1970 and 2019. The type of people HURT most by the rise in prices are
Starbucks, because the price of coffee increased faster than the cost to make it
A retired person living on a fixed income
A teenager working at Starbucks after school whose tips are a percentage of the purchase
Borrowers
The same cup of coffee increased from 25 cents to $1.59 between 1970 and 2019. The type of people HELPED most by the rise in prices are
Starbucks, because the price of coffee increased faster than the cost to make it
Lenders
A retired person living on a fixed income
A teenager working at Starbucks after school who is saving money.
What is not a possible reason why the price of coffee has increased during this time?
The US government increases the taxes businesses that sell coffee
Culturally, Americans began drinking coffee at a younger age
Fewer people drink coffee
The price of coffee beans increased
This cartoon shows that not all people who are not working are included in the unemployment rate. What has to be true for a person to be included in the unemployment rate?
Must be a student in a college or job training program.
Under the age of 16
Must be ready, willing and able to work and be actively looking for a job
Serving in the military
Some forms of unemployment are considered “positive” because they happen in a growing or changing economy. What are the “positive” types of unemployment?

Pick TWO
Cyclical
Frictional
Depressing
Structural
Bad type of unemployment happens during a depression when people who are ready, willing and able to work cannot find jobs because there are no jobs available. This type of unemployment is
Structural
Cyclical
Frictional
Depressing
The items included in the CPI (Consumer Price Index) changes over time because:
Every President gets to choose what is included in the CPI
The BLS gets bored and wants to use new numbers
New technologies and changes in consumer spending patterns require changes to what is included in the CPI
The CPI is determined by the World Bank
Economists use the CPI to look at the change in the average price of a fixed set of goods so they can study
Unemployment
Trade deficits
National debt
Inflation
What has the greatest impact on the CPI?
Transportation
Medical Care
Education
Housing
When the auto industry shifted from human production to robot production of cars, many people became unemployed. Why can this type of unemployment be considered a sign of a good economy?
Good economies do not manufacture goods
Strong economies do not have jobs for low educated, low skilled people
Automation shows the nation has and supports innovation, new ideas, and new technology which leads to more efficient production and new opportunities.
The cars are still being made in America, even if people aren’t doing it
What type of worker can benefit from becoming unemployed due to technological advancements?
One who can collect an unemployment check
One who learns a new, higher paying skill so they can work with the technology
One who can now stay home all day
One who moves to a new area to try to find the same job
Firms use robots instead of human labor to reduce the cost of making their product. What type of inflation would be reduced by this decision?
Deficit
Demand-pull
Monetary
Cost-push
When a government spends more money than the revenue it receives, it is creating a
Budget Deficit
Budget Surplus
Bubble
Profit
The accumulation of a nation’s budget deficits over time is their
National debt
Fiscal Policy
Legacy
Net Profits
What pair of decisions would increase the debt the fastest?
Increasing taxes and cutting spending on welfare and the military
Cutting taxes and Cutting spending on welfare and the military
Cutting taxes and increasing spending on welfare and the military
Increasing taxes and Increasing spending on welfare and the military
An example of Consumer spending is
A car made in America and sold in Brazil
A soda purchased by a student at lunch
Submarine purchased by US Navy
A latte machine purchased by Dunkin Donuts
An example of GOVERNMENT SPENDING is
Submarine purchased by US Navy
A car made in America and sold in Brazil
A latte machine purchased by Dunkin Donuts
A soda purchased by a student at lunch
An example of INVESTMENT is
A latte machine purchased by Dunkin Donuts
Submarine purchased by US Navy
A soda purchased by a student at lunch
A car made in America and sold in Brazil
An example of EXPORT is
Submarine purchased by US Navy
A soda purchased by a student at lunch
A car made in America and sold in Brazil
A latte machine purchased by Dunkin Donuts
This article shows that the Biden administration created a fiscal policy designed to speed up the economy by
Decreasing the reserve ratio
Increasing taxes on the wealthy and corporations
Increasing government spending
Decreasing the money supply by increasing interest rates
If the Biden administration wishes to AVOID creating a budget deficit and increasing the national debt, in addition to the steps suggested above, the government would also have to
Pass laws establishing low prices
Make labor laws stricter to make it harder to get a job
Decrease taxes on corporations and individuals
Increase taxes or boost government revenue
If the Biden administration was not worried about increasing the national debt and wanted to speed up the economy even more, in addition to the steps suggested above, the government would also have to
Decrease taxes on corporations and individuals
Increase taxes or boost government revenue
Make labor laws stricter to make it harder to get a job
Pass laws establishing low prices
In 2019 and in 2022 the Unemployment Rate was BELOW the Natural (Noncyclical) Rate of unemployment, which means there was very high levels of employment.

When this situation occurs, what do economists expect to happen?
Deflation
Recession
Depression
Inflation
What types of unemployment are combined to determine the Natural Rate of Unemployment?
Structural and Technological
Frictional and Seasonal
Frictional and Structural
Structural and Cyclical
According to this graph, between 2008-2009 the unemployment rate was above the Non Cyclical (Natural) Rate of Unemployment. Meaning lots of people did not have jobs.

When this situation occurs, what do economists expect to happen?
Expansion
Inflation
Boom
Deflation (prices drop)