Question 1

Money illusion occurs when we compare dollar amounts:

without adjusting for technology.

without adjusting for inflation.

between two years.

between the CPI and the GDP.

Question 2

Government consumption includes all:

salaries paid to factory workers.

fuel for nuclear submarines.

cola served in a company cafeteria.

pencils bought by a private university.

Question 3

Which of the following is not an example of the underground economy?

Off-the-books babysitting

Illegal drug deals

Commissioned salespeople

Cash under the table businesses

Question 4

A record of your father's wages in 1976 would be viewed today as:

real dollars.

nominal dollars.

inflationary dollars.

pure dollars.

Question 5

GDP per capita means:

Gross Domestic Product per business.

Gross Domestic Product per employee.

Gross Domestic Product per person.

Gross Domestic Product per dollar in revenue.

Question 6

Core inflation is defined as:

inflation that takes energy and food into account.

inflation that does not take energy and food into account.

inflation that takes health care and energy into account.

inflation that does not take health care and energy into account.

Question 7

What does the phrase "owners equivalent rent" mean?

It is the measure of the price of five years' worth of housing services

It is the measure of the price of a home

It is the measure of the value of a year's worth of housing services

It is the measure of the value of three years' worth of housing services

Question 8

Since the 1950s, non-residential investment has:

changed, as we invest more in software and computers than buildings.

not changed.

declined.

decreased substantially.

Question 9

An increase without inflation adjustment is called:

a real increase.

a nominal increase.

a net increase.

a inflationary increase.

Question 10

Relative price shifts explain why:

the inflation rate of a particular good or service shifts up or down over a period of time.

the deflation rate of a particular good or service shifts up or down over a period of time.

the inflation rate of a particular good or service does not change over a period of time.

the disinflation rate of a particular good or service shifts up or down over a period of time.

Question 11

Certain behavior associated with anticipated inflation can:

reduce inflation rates overall.

allow lenders to collect with more valuable dollars.

allow borrowers to pay with more valuable dollars.

actually increase the rate of inflation.

Question 12

A relative price shift occurs when:

the inflation rate of a good or service remains unchanged.

the inflation rate of a good or service is significantly higher or lower than the overall inflation rate.

the inflation rate of a good or service matches the overall inflation rate.

inflation exceeds the average revenue per capita.

Question 13

Which of the following does not count as personal consumption?

Gambling losses

Spending on education

Bequests to a hospital

Paying taxes

Question 14

Unanticipated inflation is:

the sudden deceleration of the rate of inflation compared with expected inflation.

the sudden acceleration of the rate of price increases above expected inflation.

the sudden acceleration of the rate of price increases below expected inflation.

the sudden deceleration of the rate of price increases above expected inflation.

Question 15

Goods that are produced but not immediately sold:

do not count in the GDP.

count in the GDP as inventory.

count in the GDP as intermediate input.

count in the GDP as private investment.