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Intro Economics - Unit 4 Review Flashcards | StudBud
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Intro Economics - Unit 4 Review
Intro Economics - Unit 4 Review
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1
In measuring Gross Domestic Product,
market value
refers to
the number of goods and services sold during a year
price at which a good or service sells in the market place
the value of sales at all stores throughout the economy
the prices of goods produced but not services provided
2
Which of the following is a final good produced by a car manufacturer?
Tires
Seats
Steel
Cars
3
How are people on fixed incomes affected by inflation?
negatively, since your income doesn't rise with prices
Income and inflation have no connection
positively, because your purchasing power increases
negatively, because inflation would lower your pay
4
What happens to unemployment rates when the economy is in contraction?
Frictional unemployment falls
All unemployment rises
Structural unemployment disappears
Seasonal unemployment falls
5
Who gains from unanticipated inflation?
A widow on fixed income
Bank who issued a fixed rate mortgage.
The Federal Government
Borrower who is paying back an adjustable rate loan
6
What is
not
included in US GDP?
Ford Focus made in Mexico
Coconuts harvested in Guam
Toyota Sienna made in Tennessee
Wheat grown in Nebraska
7
What is the purpose of interest for a saver (in a savings account)?
Cover increases in purchasing power due to inflation
Cover increases in purchasing power due to disinflation
Penalize savers for not spending now
Cover losses in purchasing power due to inflation
8
You get 1% interest on your savings account, but inflation is 2%. What is true after 1 year?
I can buy more than today
I can buy less than today
Do not know
I can buy exactly the same as today
9
What sample do economists use to create price indexes?
Market Basket
Price Deflator
Consumer Price Index
Producer Price Index
10
Which is the best example of underemployed?
A licensed teacher delivering pizza
A Ph.D in physics working for NASA
A high-school dropout loading trucks at UPS
An accountant who quits to raise children at home
11
The costs and consequences of high unemployment include all except:
an effect on the health of families
decrease in property crime
an effect on family stability
lower wages
12
When aggregate demand > aggregate supply
Pull-demand inflation
Demand-pull inflation
Push-demand inflation
Demand-push inflation
13
Which component of GDP is the largest in the US?
Consumption
Investment
Net Foreign Trade
Government Spending
14
What would cause the shift depicted in the model?
The Federal Government raises individual income tax rates
Businesses expand production to provide more goods
Consumer income rises increasing demand
A hurricane destroys the orange crop in Florida
15
Inflation is:
A sustained increase in the average price level over time.
A sustained increase in GDP over time
A sustained decrease in GDP over time
A sustained decrease in the average price level over time.
16
Who benefits the most from inflation?
Persons on fixed incomes
The government
Lenders
Long-term fixed rate borrowers
17
How do
fears of future economic problems
affect GDP?
consumers would spend less and save money reducing GDP
businesses would invest more increasing GDP
government would spend less to save money for the future
consumers would spend more to prevent economic problems
18
Which type of inflation is always caused by excessive monetary growth?
Galloping Inflation
Deflation
Hyperinflation
Creeping Inflation
19
The statement that informed consumers have a time preference for money means that consumers:
prefer $100 payable every 6 months for 5 years vs $1,000 now
prefer $1,000 payable in 5 years vs $1,000 now
prefer $200 each year for five years versus $1,000 now
prefer $1,000 now versus$1,000payable in five years
20
Discouraged workers
Are part of the labor force
Are counted as part of total unemployment.
Do not actively seek employment.
Are workers who are unhappy in their jobs
21
Annual price-adjusted value of final goods and services produced within a country's borders.
Inflation
Real GDP
Nominal GDP
Per Capita GDP
22
Which of the following is an example of inflation?
Prices of computers increases
Average price level of things you buy increased last year
Price of lettuce rises 40 cents overnight
Price level of many things increases over time
23
If Jonathan is earning 2% on an investment and inflation is increasing by 3%, what is happening to his purchasing power?
It's not changing
It's increasing
Inflation and purchasing power are not related
It's decreasing
24
Unanticipated inflation benefits
Borrowers at the expense of lenders.
Investors at the expense of savers.
Publicly quoted companies at the expense of private partnerships.
Taxpayers at the expense of government.
25
Technological progress leads to higher real GDP per capita, which leads to a...
Higher output
Higher quality of life
Higher standard of living
Higher income for the population
26
Cyclical unemployment:
Occurs due to a downturn in the economy
happens when computers replace workers
when job skills do not match available openings
someone who is temporarily between jobs due to relocating
27
Which of the following people would be considered underemployed?
Frank is unemployed, but has stopped looking for a job.
Mary is looking for work in a specialized field.
Carlos is not earning as much money as he really needs.
Rochelle has a Ph.D., but is working in a low-skilled job.
28
The civilian labor force includes:
all employed and unemployed people
all employed people and the military
all employed people and all others over the age of 12
all working people not in the military
29
Frictional unemployment:
occurs only during recessions
occurs when people lack the skills needed for available jobs
the only type enabling unemployment benefits
short-term when people are looking for their first job
30
What are the components of GDP?
Consumption(C), Inflation(I), Government Spending(G), Exports(E)
Consumption(C), Income (I), Govt Spending(G), Net Exports(X-M)
Consumption(C), Investment(I), Govt Spending(G), NetExports(X-M)
Consumption(C)' Income(I), Government Spending(G), Exports(E)
31
A bus company buys new buses as part of the current year's GDP. It would be counted as...
government spending
investment spending
income spending
consumption spending
32
Annual value of final goods and services produced within a country's borders in current prices
Real GDP
Nominal GDP
GNP
Inflation
33
What causes perceived inflation to be higher than measured inflation?
Prices of everyday goods may change more than prices in general
Price rises are more noticeable than decreases or stable prices
Prices for what you buy can change more than average prices
All answers are correct
34
What is real GDP per capita?
Real GDP divided by the total population
Gross domestic product
“for each person”
Total value of all final goods and services produced in a particular econom
35
Which of the following is most likely to hurt the growth of the economy?
spending on research and development
Spending on education and job skills
increasing capital expenditures
increasing the interest rate for loans
36
Structural unemployment:
is what happens to ski instructors in the spring
happens when someone has moved cities and seeking a new job
happens when jobs are replaced with new technology
happens only during recessions
37
Over ten years, your salary has doubled while inflation has tripled. Which is true?
<p>Nominal income rose, real income rose</p>
nominal income rose, real income fell
nominal income fell, real income fell
nominal fell, real income rises
38
What will occur when the demand for goods and services drops during a recession?
the demand for labor rises
the demand for labor drops
no frictional unemployment exists
The business cycle resumes an upward trend
39
What is the best description of underemployment?
a person was working but gets laid off
the person is overqualified for their current job
the person is in college and looking for a new job
a person is out of work and has stopped looking for work
40
Per capita GDP
the average GDP over a 10-year period
the amount of GDP the government receives through taxes
the amount of GDP that is available for each person
the average GDP across all 50 states
