1. Which of the following is a long-run macroeconomic policy goal?

a. reduce unemployment
b. increase inflation
c. promote steady growth
d. eliminate recession

2. Real GDP is

a. the best measure we have for total production, though it does have some flaws.
b. the worst measure we have of total production because it misses much of what is produced.
c. the best measure we have for total production because it doesn't miss anything.
d. ignored as a measure of total production because it is does not take account of inflation.

3. If the CPI was 132.5 at the end of 2003 and 140.2 at the end of 2004, the inflation rate over these two years was

a. 7.7 percent.
b. 5.4 percent.
c. 4.4 percent.
d. 5.8 percent.

4. If our exports are $1.2 billion and our imports are $1.7 billion,

a. the United States is lending to the rest of the world.
b. U.S. national saving is too high.
c. the United States is borrowing from the rest of the world.
d. U.S. investment must decrease.

5. In the expenditure approach to GDP, the largest component is

a. government purchases.
b. personal consumption expenditures.
c. gross private domestic investment.
d. net exports.