15. The table below displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is  TRUE ?


(A) If Bob confesses, Joe should confess.

(B) The dominant equilibrium is that Joe and Bob both serve 2 years.

(C) If Joe does not confess, Bob should not confess.

(D) If Joe confesses, Bob should not confess.

16. If Nike, an American corporation, produces sneakers in Thailand this would (A) count for both Thailand’s GDP and U.S. GDP. (B) add to neither U.S. GDP nor Thailand’s GDP. (C) count as part of U.S. GDP since it is a U.S. corporation. (D) add to Thailand’s GDP but not to U.S. GDP.

17. The calculation of the final goods and services sold in an economy would NOT include (A) Ford Motor Company’s purchase of a new industrial robot to be used to produce cars. (B) the purchase of a service by a household. (C) the purchase of a lawnmower by a household. (D) General Motors’ purchases of tires for new automobiles.

18. Which of the following relationships is   CORRECT  ? (A) Consumption expenditure = Net Investment - Depreciation (B) Gross Investment = Net Investment + Depreciation (C) Depreciation = Gross Investment - Consumption expenditure (D) Net Investment = Gross Investment + Depreciation

19. How would you best describe a manufacturing employee who has been fired because he was replaced by a robot (new technology) and does not have the skills necessary to help operate the robot? (A) entrant/reentrant (B) cyclically unemployed (C) structurally unemployed (D) job leaver 

20. An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that (A) inflation is not occurring. (B) an expansion is occurring in the economy. (C) a trough in the business cycle will soon be reached. (D) a recession is in progress.

21. In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table below. The reference base period for Dexter’s CPI is 2012. What is the inflation rate in 2013? (A) 31 percent (B) zero (C) 69 percent (D) 2 percent

22. If an economy tried to use bananas as money, which function would bananas likely have the most difficult time fulfilling? (A) a means of payment (B) a store of value (C) a medium of exchange (D) a unit of account

23. If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money (A) is $20 trillion. (B) is $5 trillion. (C) is $2 trillion. (D) cannot be determined from the information given.

24. One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises, (A) people substitute toward more imported goods and services. (B) firms produce more goods and services. (C) firms produce fewer goods and services. (D) peoples’ wealth increases. 

25. Which of the following would   NOT   shift the U.S. aggregate demand curve? (A) a change in income in Canada (B) a change in the quantity of capital in the United States (C) U.S. monetary and fiscal policy (D) an expectation that inflation will be lower in the future

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