Which goods would be included in the calculation of GDP?

1. A music store holds a half-price sale on all CDs. During the sale, people buy more CDs than usual. What does this event show? a. inelasticity of demand c. the law of demand b. the substitution effect d. a demand schedule

2. What stays the same when you change an individual demand schedule into a market demand schedule for the same product? a. price of the product c. number of consumers b. demand curve d. quantity demanded

3. A restaurant owner has not changed menu prices in a year. One month ago, the owner noticed that sales had fallen by 50 percent. Which of the following most likely caused the demand curve to shift? a. Area population increased. b. Gas prices decreased. c. A nearby factory shut down. d. A local newspaper praised the restaurant’s food.

4. The price of home computers rises. According to the law of supply, manufacturers will respond to this price increase by • increasing computer production. b. halting computer production. • decreasing computer production. • keeping computer production steady.

5. Farmer Brown has ten dairy cows. Her feed costs go up, but milk production stays the same. What effect will this have on her supply? a. None, although she will raise prices to make up the lost revenue. b. Her supply will go down, because her fixed costs have risen. c. Her supply will go up, because she won’t sell as much milk. d. Supply will remain the same, but she will have to sell more.

6. Which goods would be included in the calculation of GDP? a. toys made in China at a factory owned by a U.S. company b. cars made in Ohio at a factory owned by a Japanese car company c. plastic made in Kentucky and sold to a toy maker in Hawai’i d. cloth made in India and sold to clothes makers in the U.S.

7. Which of these is a limitation of GDP? a. It does not include government goods and services. b. It does not measure a country’s well-being. c. It does not measure the success of a country’s economy. d. It does not include goods that are exported

8. Which shows depreciation? a. A store owner lowers the price of a swimsuit by $10. b. After 180,000 miles of driving, a truck is worth less than when it was purchased. c. An employer refuses to pay for training for his employees. d. A company’s stock loses value when profits fall.

9. What is considered a normal unemployment rate? a. 0 to 2 percent c. 8 to 10 percent b. 4 to 6 percent d. 10 to 12 percent

10. Which items does the consumer price index measure? a. nonfood items purchased by adult consumers b. food items purchased by rural families c. goods and services purchased by an urban consumer d. food and necessary services for any family

11. Which of the following people is underemployed? a. Frank is unemployed, but he has stopped looking for a job. b. Mary is looking for work in a law office. c. Carlos is not earning as much money as he really needs. d. Rochelle has a college degree, but she is working in a low-skill job.

12. Jessie’s grandfather tells him that a dollar went farther when he was a child than it does today. What does he mean? a. Currency was more durable when he was young. b. A dollar had more purchasing power when he was young. c. People today do not take care of their money. d. U.S. currency is used in more countries today.

13. Which person is most likely to be described as “working poor”? a. Dolores, who has an advanced degree and works 40 hours a week b. Jason, who works part-time so he can start a real estate business c. Jim, a full-time student with a job in the college library d. Deb, a single mother who works part-time at minimum wage

14. Jessica has an advanced degree in chemistry. However, a laboratory will not hire her until she learns how to use the latest software.Which of these conditions describes Jessica’s situation? • seasonal unemployment b. structural unemployment c. frictional unemployment d. underemployment

15. Whom does the government consider to be poor? a. families whose income level does not support their household b. single-parent households in urban areas c. inner-city residents who live in poor neighborhoods d. individuals who work at minimum-wage jobs

16. Summer causes demand for ice cream to go up. What happens next? • Ice cream factory workers strike. • Factories make less ice cream. c. Ice cream makers raise prices. d. Stores import ice cream.

17. A factory makes pencils. New machines in the factory make it faster and cheaper to make pencils. What will happen next? a. Costs will drop, but supply will remain the same. b. Supply and costs will both decrease. c. Costs will go down and supply will go up. d. At first, supply will rise, but then it will decrease.

18. Why does an economist create a market demand schedule? a. to learn what demands the market will make under unusual conditions b. to have an idea of how a market would change if conditions in an area changed c. to predict how people will change their buying habits when prices change d. to show how various conditions can change the demand for a good

19. Things used to make goods and services

20. A graph of a demand schedule

21. The dollar value of all final goods & services produced within a country’s borders in a given year.

22. Government intervention in a market that affects the production of a good

23. General rise in prices

24. Chart that lists how much of a good a supplier will offer at various price levels.

25. Goods or services sent to another country for sale.

26. When people and nations depend on one another for the goods and services they want.

27. Goods that are used in place of one another

28. Products used in the production of final goods.

29. Income that is not spent

30. Amount of goods available

31. General drop in the price level

32. The actions or activities that one person performs for another

33. Gifts of nature used to make goods and provide services.

34. When a change in price does not affect demand very much.

35. Level below which income is too low to support a family.

36. Inflation is caused by too much money in the economy