1. Test Review

2. Business Cycle #1 A steady, long-term increase in real GDP is
economic growth.
a depression.
a peak.
a recession.

3. Business Cycle #2
A period of economic growth as measured by a rise in real GDP is a(n)
A. business cycle.
B. peak.
C. contraction.
D. expansion

4. Business Cycle #3
A prolonged economic contraction that is not especially long or severe is referred to as a A. depression. B. recession. C. stagflation. D. trough.

5. Business Cycle #4
What is a business cycle? A. a period of increased economic growth B. a period of economic growth followed by economic contraction C. the amount of time it takes a business to produce its products D. a dangerous time for all businesses

6. Business Cycle # 5 What is a recession?
A period when real GDP falls for at least 6 month
A long a severe depression
A mild and short expansion

7. Business Cycle #6
The stage in a business cycle when real GDP stops falling is A. expansion. B. the peak. C. contraction. D. the trough.

8. GDP Review # 1
GDP expressed in constant, or unchanging, prices is referred to as A. real GDP. B. nominal GDP. C. aggregate supply. D. aggregate demand.

9. GDP Review #2
The total amount of goods and services in the economy available at all possible price levels is the A. gross national product. B. gross domestic product. C. aggregate demand. D. aggregate supply.

10. GDP # 3
Suppose an economy's entire output is automobiles. In Year 1, the country's real GDP is $300,000 and all manufacturers in the economy produce cars at $15,000 each. In Year 2, all manufacturers produce cars at $16,000 each. What is the real GDP in Year 2, if 20 cars are produced? A. $300,000 B. $320,000 C. $20,000 D. $280,000

11. GDP #4 Goods used in the production of final goods are Durable goods
Nondurable goods
Intermediate goods
Final goods

12. GDP # 5
Which of the following is included in GDP? A. an intermediate good B. a service produced and used in another country C. a fish that you catch and eat yourself D. a fish that you buy at the market or store

13. Inflation #1 Inflation that is out of control is referred to as
Hyperinflation
Deflation
Wage price spiral
Cost push inflation

14. Inflation #2
If Julia invested $3,000 at an annual interest rate of 5% and from last year to this year there has been a 4% inflation rate, then, after a year the purchasing power of her investment A. rose by 1%. B. fell by 1%. C. is 4%. D. is 5%.

15. Inflation #3
The measurement that shows how the average price of a standard group of goods changes over time is the
Market basket
Inflation rate
Price index
Core inflation rate

16. Inflation #4
The theory that inflation occurs when producers raise prices in order to meet increased costs is the
Demand pull theory
Cost push theory
Quantity theory
Wage price spiral

17. Inflation #5 Inflation reduces purchasing power because
The same amount of money buys more goods and services
The same amount of money buys fewer goods and services
The market basket has to be changed every year
There is not enough money in the economy

18. Inflation #6 The inflation rate is
The ability to buy goods or services
Measured in fixed dollars
Not an important measure to economists
The percentage change in price over time

19. Putting it Together #1
Business investment, interest rates and credit, consumer expectations, and external shocks are the four main factors that affect
The business cycle
Gross national product
Gross domestic product
Inflation

20. Putting it Together #2
What is the BEST measure of a nation’s standard of living?
Real GDP per capita
Population growth
Savings
Nominal GDP per capita

21. Putting it Together #3
During the Contraction Phase of the Business Cycle, GDP
Is rising
Stops rising
Is always falling
Is not changing

22. Putting it Together #4
The stage of the business cycle where GDP stops falling is
Expansion
The peak
Contraction
The trough

23. Putting it Together #5
Typically, when unemployment falls to very low levels
Inflation is unchanged
Inflation increases
A period of deflation follows
The purchasing power of a dollar increases

24. Putting it Together #6 Which statement best describes full employment?
Everybody who wants a job has a job
There is no unemployment at all
There is no cyclical unemployment
There is no structural unemployment

25. Unemployment #1
Unemployment that occurs as a result of harvest scheduled or vacations, or when industries slow or shut down during a certain part of the year is called
Frictional
Seasonal
Structural
cyclical

26. Unemployment #2
A technician specializing in the repair of video cassette players lost her job several years ago when then DVD player became more affordable for consumers. This is a case of
Frictional unemployment
Seasonal unemployment
Structural unemployment
Cyclical unemployment

27. Unemployment #3
Unemployment that occurs when people take time to find jobs is called
Frictional
Seasonal
Structural
cyclical

28. Unemployment #4
What will most likely still occur when the economy has achieved full employment?
frictional, seasonal, and cyclical unemployment
Seasonal, structural, and cyclical unemployment
Frictional, seasonal, and structural unemployment
None of the above are correct

29. Unemployment #5
If there were a recent downturn in the economy and some economists predicted a recession in the near future, then there is a strong possibility that there will be a
Rise in frictional unemployment
Fall in structural unemployment
Rise in structural unemployment
Rise in cyclical unemployment

30. Unemployment #6 Discouraged workers are
Not counted in unemployment rate
Counted in the unemployment rate
Included in the calculation of the labor force
Considered unemployed

31. USA Test Prep #1
Which of these is an economic indicator used to tell how an economy is doing?
Equilibrium price
Consumer price index
Job satisfaction rate
Presidential approval rate

32. USA Test Prep #2
Which of these will have an effect on the GDP of the country?
Monty buys a Picasso painting
Lisa loses $20.00 in a bet with Bart
Ned fixes Jay’s car without buying any new parts
The Shelbyville Whoopee Cushion company makes 1,000 to export to China

33. USA Test Prep #3
The US Government has decided to issue federal income tax rebates to taxpayers. What is MOST LIKELY the goal of these rebates?
Increase consumer spending
Increased transfer payments
Reduction in the employment rate
Reduction in military budget

34. USA Test Prep #4
The Consumer Price Index (CPI) is best used to determine
The Dow Jones Index
The rate of inflation
The unemployment rate
Reduction in the military budget

35. USA Test Prep #5
Ned is a typewriter repairman. As typewriters are being replaced by computers Ned finds less and less work. What type of unemployment is Ned experiencing?
Seasonal
Cyclical
Frictional
Structural

36. USA Test Prep #6
Over a three year period, the US experienced an increase in the Real GDP, low Inflation, and declining unemployment rate. For this period, the US
Was in an economic trough
Was in a stagnant economic period
Appeared to be entering a recession
Was in the middle of an economic boom