Unit 2 of 5
Study guide for CLEP CLEP Principles of Macroeconomics — Unit 2: Measuring Economic Performance. Practice questions, key concepts, and exam tips.
63
Practice Questions
19
Flashcards
8
Key Topics
Try these 5 questions from this unit. Sign up for full access to all 63.
What causes AD curve to shift right?
Increase in consumer spending
Decrease in interest rates
Decrease in government spending
Increase in taxes
Decrease in exports
Answer: A — Increase in consumer spending is correct because increased consumer spending is a determinant of AD.
Which of the following is a limitation of using GDP as a measure of welfare?
It includes income from foreign investments
It includes transfer payments
It does not account for income inequality
It only measures consumption
It only measures investment
Answer: C — It does not account for income inequality is correct because GDP does not account for income inequality, making A a less relevant concern.
In the long run, what is the relationship between the LRAS curve and the price level?
LRAS curve is upward sloping
LRAS curve is downward sloping
LRAS curve is vertical and price level is flexible
LRAS curve shifts with changes in price level
LRAS curve is horizontal
Answer: C — LRAS curve is vertical and price level is flexible is correct because LRAS is vertical, reflecting the economy's potential output. A and B are incorrect as LRAS is not sloping.
Which of the following would be included in GDP?
Purchase of a used car
Purchase of a new car
Purchase of a foreign car
Sale of a stock
Purchase of a bond
Answer: B — Purchase of a new car is correct because purchase of a new car is included in GDP as it represents production of a new good, unlike used cars or financial assets.
Which of the following is included in the calculation of GDP using the income approach?
Only wages and rents
Only profits and interest
Wages, rents, profits, and interest
Only taxes and subsidies
Only depreciation and indirect taxes
Answer: C — Wages, rents, profits, and interest is correct because the income approach includes all types of income..
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