Chapter 2 Test Review Test is Thursday

Question 1 The movement of the economy between good and bad times over many years is often referred to as: a. Inflation and deflation. b. the economic flow. c. economic transitions. d. the business cycle. D

Question 2 We always go through each state of the business cycle and each stage lasts the same amount of time. True False False

Question 3 ________ occurs when a business or government spends less than it receives in income. a. budget deficit b. budget shortage c. budget over-run d. budget surplus D

Question 4 ________ is the measure of output in relation to a unit of input. a. Yield b. Profit c. Return d. Productivity D

Question 5 In the GDP formula, GDP=C+I+G+ (X-M), the M stands for a. Net exports b. Consumer spending c. Value of all imports d. Value of intermediate goods Redo this one

Question 6 The most watched measure of inflation is called the ________. a. Consumer Price Index (CPI) b. Cost of Living Index (CLI) c. Producer Cost Index (PCI) d. Retail Price Index (RPI) A

Question 7 A person is considered unemployed if: a. They have a job that does not pay as much as they would like b. Is out of work but not looking c. Is not working, but is willing to work and is looking for work d. If they have been out of work for more than 3 months C

Question 8 Gross domestic product is the: a. dollar value of all final goods and services produced in a country during one year. b. dollar value of all goods and services produced in a country during one year. c. price-adjusted value of all goods and services produced in a country during one year. d. value of all final goods and services produced in, or imported to, a country during one year. A

Question 9 A ________ is a period of time in which demand begins to decrease, businesses lower production, unemployment begins to rise and GDP growth slows for two or more quarters of the calendar year. a. slump b. downturn c. recession d. trough c

Question 10 GDP divided by the population gives you what number? a. GNP b. GDP c. GDP per capita d. Productivity C

Question 11 What happens to the GDP formula (and the GDP) in the following situation? A foreign government imposes a tariff that discourages its citizens from buying goods from the US. Net exports increase causing GDP to go up Net exports decrease causing GDP to go down Net exports decrease causing GDP to go up Net imports increase causing GDP to go up B

Question 12 What happens in the GDP formula and the GDP in the following situation? To stimulate the economy and provide jobs, the government builds more bridges in California. Consumer spending increases causing GDP to go up Government spending increases causing GDP to go up Government spending increases causing GDP to go down Nothing—Government spending is not part of GDP B

Question 13 What happens in the GDP formula and the GDP in the following situation? Due to increased incomes, Europeans buy more US goods and services. C because Exports go up

Question 14 The savings rate in the United States is closest to: b. 25-27% c. 15-18% d. 3-5% D

Question 15 What is the approximate GDP of the US (most recent data—not in the book) $2 trillion $5 trillion $16 trillion $30 trillion C

Question 16 Based on the following data—including trends, what part of the business cycle does this country appear to be in: GDP Change Unemployment rate Consumer Demand 2009 +0.2% 3.1% 2010 +0.8% 3.0% +0.5% 2011 +1.1% 2.8% +1.2% 2012 2.6% +1.6% Best answer would be a recovery-slow changes

Question 17 Based on the following data—including trends, what part of the business cycle does this country appear to be in: GDP Growth or decline Unemployment Rate Total consumer demand 2009 +0.5% 4.5% +0.1% 2010 -0.1% 4.7% No change 2011 4.8% -1.2% 2012 4.9% -2.1% Best answer: recession

Question 18 This is a period in which most people who want to work are working businesses produce goods and services in record numbers, wages are good and GDP growth increases Recession Depression Recovery Prosperity D--Prosperity

Question 19 What is this part of the cycle? Recovery

Question 20 What is this part of the cycle? Recovery