Unit 4

Question 1

Market value

Answer 1

The price buyers are willing to pay for a good or service in a competitive market

Question 2

Net exports

Answer 2

The value of all exports minus all imports

Question 3

Intermediate goods

Answer 3

A good used in the production of a final good

Question 4

Nominal GDP

Answer 4

A measure of a country’s economic output values in current dollars

Question 5

Current dollars

Answer 5

The value of a dollar in the year it is spent

Question 6

Final good

Answer 6

A new good that is ready for consumer use

Question 7

Real GDP

Answer 7

A measure of a country’s economic output valued in constant dollars

Question 8

Constant dollars

Answer 8

The value of a dollar fixed at q specified base year

Question 9

Per capita GDP

Answer 9

Nation’s real GDP divided by the population

Question 10

Informal economy

Answer 10

Sector of the economy that operates without government regulations or monitoring and is not officially recorded or taxed

Question 11

literacy rate

Answer 11

The percentage of people in the country who can read and write

Question 12

Life expectancy

Answer 12

The number of years on average that a person is expected to live

Question 13

Infant mortality

Answer 13

The rate at which babies died during the first year of life

Question 14

Unemployment rate

Answer 14

The percentage of the labor force that is not employed but is actively seeking work

Question 15

Frictional unemployment

Answer 15

A type of unemployment that results when workers are seeking their first job or have left one job and are seeking another

Question 16

Structural unemployment

Answer 16

What type of unemployment that results when the demand for certain skills the client, often because of changes in technology or increased foreign competition

Question 17

Seasonal unemployment

Answer 17

A type of unemployment that results when businesses shut down or slow down for part of the year

Question 18

Cyclical unemployment

Answer 18

A type of unemployment that results from a period of decline in the business cycle

Question 19

Natural rate of unemployment

Answer 19

The percentage of the labor force without work when the economy is at full employment

Question 20

Discouraged workers

Answer 20

Unemployed workers who have ceased to look for work

Question 21

Involuntary part time workers

Answer 21

People who settled for part time employment because they’re unable to find full-time work

Question 22

Underground economy

Answer 22

A sector of the economy based on illegal activities

Question 23

Inflation rate

Answer 23

The percentage increase in the average price level of goods and services from one month or year to the next

Question 24

Price index

Answer 24

A measure of the average change in price of a type of good overtime

Question 25

Consumer price index

Answer 25

A measure of price changes in consumer goods and services overtime

Question 26

Cost-of-living index

Answer 26

A measure of change in the overall cost of goods and services

Question 27

Nominal cost of living

Answer 27

The cost incurred dollars of all the basic goods and services needed by the average consumer

Question 28

Real cost of living

Answer 28

The cost in constant dollars of all the basic goods and services needed by the average consumer

Question 29

Nominal wages

Answer 29

Wage levels based on current dollars

Question 30

Real wages

Answer 30

Wage levels based on constant dollars

Question 31

Creeping inflation

Answer 31

A gradual, steady rise in the price of goods and services overtime

Question 32

Deflation

Answer 32

A fall on the price of goods and services

Question 33

Deflationary spiral

Answer 33

A downward trend and prices, wages, and business activity

Question 34

Demand pull inflation

Answer 34

A rise in the price of goods and services caused by an increase in overall demand

Question 35

Cost pull inflation

Answer 35

A rise in the price of goods and services caused by increase in the cost of the factors of production

Question 36

Wage price spiral

Answer 36

An upward trend in wages and prices

Question 37

Business cycle

Answer 37

A recurring pattern of growth and decline in economic activity overtime

Question 38

Expansion

Answer 38

A period of economic growth

Question 39

Peak

Answer 39

The highest point of an expansion, or period of economic growth

Question 40

Contraction

Answer 40

A period of general economic decline marked by falling GDP and rising unemployment

Question 41

Trough

Answer 41

The lowest point of the contraction, or period of economic decline

Question 42

Leading economic indicators

Answer 42

Measures that consistently rise or fall several months before an expansion or contraction begins

Question 43

Lagging economic indicators

Answer 43

Measures that consistently rise or fall several months after an expansion or contraction begins

Question 44

Recession

Answer 44

A period of declining national economic activity

Question 45

Inventory

Answer 45

Merchandise the companies or stores have on hand

Question 46

Depression

Answer 46

A prolonged economic downturn characterized by plunging real GDP and extremely high unemployment

Question 47

GDP

Answer 47

The market value of all final goods and services produced within a country during a given period of time