Unit 2 Flashcards
(26 cards)
Which is an example of cyclical unemployment?
• a factory worker losing his or her job because of a recession
• a tourist guide losing his or her job when tourism drops in the winter.
• a librarian losing his or her job because of new technology
• a fast-food cook quitting his ot her job to seek a better paying job
a factory worker losing his or her job because of a recession
When aggregate demand decreases,
• all of the choices
• unemployment decreases
• price level falls
• wages increase
price level falls
Suppose the CPI was 110 last year. This year it is 111. What has occured?
• deflation
• inflation
• stagflation
• hyperinflation
inflation
If the CPl increased from 80 to 84, the rate of inflation is:
• 2%
• 4%
• 5%
• 10%
5%
Laura deposits $100 in a savings account that pays 5 percent interest per year. At the end of the year, she has $105, but the inflation rate during that year was 5 percent. As a result, the $105 buys
• what $95 bought a year ago
• what $90 bought a year ago
• what $105 bought a year ago
• what $100 bought a year ago
what $100 bought a year ago
Gross domestic product is
• the sum of all the income earned during the year by people who are involved in the production of goods and services
• the sum of spending by households, businesses, the government, and foreign countries
• all of the choices
• the total dollar value of all final goods and services produced within the country’s borders in a given year
all of the choices
Nominal GDP for the economy is
1410
1510
1500
1510
The base year for this CPI is year:
3
2
1
4
2
Suppose there were 9 million unemployed workers and 1 million discouraged workers. The size of the labor force was 154 million workers. How many people were employed?
• 154 million
• 144 million
• 145 million
• 153 million
144 million
Which of the following would lead to a simultaneous decline in unemployment and inflation?
• a decrease in aggregate demand
• an increase in aggregate supply
• an increase in aggregate demand
• a decrease in aggregate supply
an increase in aggregate supply
The growth of the subprime mortgage market led to:
• a decrease in home ownership as investors chose other assets over housing.
• a decreased demand for houses as the less credit worthy borrowers could not obtain residential mortgages.
• an increased demand for houses and helped fuel the boom in housing prices.
an increased demand for houses and helped fuel the boom in housing prices.
When Russian buyers decide not to buy U.S. meat products from animals who consume feed with certain ingredients (all else held constant), what happens?
• U.S. exports decline
• U.S. imports rise
• U.S. net exports rise
• U.S. GDP rises
U.S. exports decline
Which of the following statements best describes what happened to the GDP in 2008?
• The GDP rose because businesses paid higher taxes.
• The GDP fell because of a major recession.
• The GDP held steady due to seasonal adjustment.
• The GDP grew too quickly between 2000 and 2008.
The GDP fell because of a major recession.
Daisy borrows $10,000 from her friend, Luke. They expect inflation to be 5% this year, and she agrees to pay him $10,800 (5% fixed interest rate) at the end of the year. If inflation is only 3%, what happens?
• Daisy is better off than she would have been at 5% inflation
• there is no impact on how well off Luke and Daisy are
• Luke is better off than he would have been at 5% inflation
• there is not enough information
Daisy is better off than she would have been at 5% inflation
Explain each of the following in context of real GDP and unemployment.
a. a peak
b. a trough
c. a contraction
d. an expansion
Real GDP
peak - when real GDP is at its maximum
trough - when real GDP is at its minimum
contraction - when real GDP decreases
expansion - when real GDP increases
Unemployment
peak - lowest point in unemployment
trough - highest level in unemployment
contraction - unemployment levels are increasing
expansion - unemployment levels are decreasing
John works full-time as a waiter but has a degree in architecture. As a result, John is considered to be
• unemployed
• fully employed
• underemployed
• temporarily employed
underemployed
Which of the following people could benefit from Medicare?
• a 70-year-old who works part-time at a grocery store
• a 40-year-old who was laid off from a full-time job
• a 15-year-old who delivers newspapers
• a 25-year-old who lives in poverty
a 70-year-old who works part-time at a grocery store
GDP does NOT include which of the following:
• Vegetables grown and consumed at home by Mr. Keleman
• An American Heritage student buying lunch at Chik-Fil-A
• A restaurant purchasing and installing new flooring.
• The US Navy buying a new F-14 fighterjet
Vegetables grown and consumed at home by Mr. Keleman
The main reason for demand-pull inflation is the creation of
• excess money by the government
• excess taxes by the government
• excess goods by producers
• excess services by entrepreneurs
excess money by the government
All of the following statements about GDP are true EXCEPT:
• Intermediate goods are counted in calculating GDP
• The net balance of trade factors into GDP
• GDP includes only goods and services that are produced within a country
• GDP measures the value of production in a given time period
Intermediate goods are counted in calculating GDP
Suppose you volunteer your time to help an elderly neighbor in her yard. How does your effort impact U.S. GDP?
• there is no change in GDP
• there is not enough information
• GDP decreases
• GDP increases
there is no change in GDP
Government spending counted as part of GDP includes spending on:
• public education
• unemployment compensatio
• social secuirty
• veteran’s benefits
public education
The number that is published by the federal government for the unemployment rate is expressed as a percentage of
• the labor force
• those employed
• the population
• those unemployed
the labor force
When you purchase the latest I Phone, what part of GDP is this considered?
• government purchases
• net exports
• consumption
• investment
consumption
