24 ❯ Step 2. Determine Your Test Readiness
- An American firm moves a manufacturing plant
from the United States to Brazil. How will this
affect gross domestic product (GDP) in the United
States and in Brazil?
(A) U.S. GDP falls and Brazil’s GDP falls.
(B) U.S. GDP rises and Brazil’s GDP falls.
(C) U.S. GDP falls and Brazil’s GDP remains
constant.
(D) U.S. GDP falls and Brazil’s GDP rises.
(E) U.S. GDP remains constant and Brazil’s GDP
rises. - For years you work as a grocery checker at a
supermarket, and one day you are replaced by
self-serve checkout stations. What type of unem-
ployment is this?
(A) Cyclical
(B) Structural
(C) Seasonal
(D) Frictional
(E) Discouraged - If the consumer price index (CPI) increases by
2 percent and your nominal income increases by
8 percent, your real income has approximately
(A) increased by 4 percent.
(B) decreased by 4 percent.
(C) increased by 6 percent.
(D) decreased by 6 percent.
(E) increased by 10 percent. - To deflate nominal gross domestic product (GDP),
you must
(A) divide nominal GDP by the price index (in
hundreds).
(B) multiply real GDP by the price index.
(C) divide real GDP by the price index (in hun-
dreds).
(D) multiply nominal GDP by the price index
(in hundreds).
(E) divide nominal GDP by real GDP.
9. A stronger stock market is likely to cause which of
the following changes in the consumption func-
tion and aggregate demand?
CONSUMPTION AGGREGATE
FUNCTION DEMAND
(A) Increase Increase
(B) No change No change
(C) Increase No change
(D) Increase Increase
(E) Decrease Decrease- An increase in corporate optimism will have which
of the following effects in the market for loanable
funds?
(A) An increase in supply, lowering the interest rate.
(B) A decrease in demand, increasing the interest
rate.
(C) An increase in both supply and demand, and
an ambiguous change in interest rates.
(D) A decrease in supply, decreasing the interest
rate.
(E) An increase in demand, increasing the interest
rate. - If the economy is operating below full employ-
ment, which of the following will have the greatest
positive impact on real gross domestic product?
(A) The government decreases spending with no
change in taxes.
(B) The government increases spending with no
change in taxes.
(C) The government decreases spending and
matches it with a decrease in taxes.
(D) The government holds spending constant
while decreasing taxes.
(E) The government increases spending and
matches it with an increase in taxes.