GDP/Business Cycle

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What are the two parts of economics?

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Microeconomics and macroeconomics

Supply and demand

Gross Domestic Product and unemployment

Inflation and interest rates

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What is the main focus of macroeconomics?

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Studying economic aggregates

Analyzing individual consumer behavior

Calculating market prices

Predicting stock market trends

Multiple Choice

What are the three economic goals of policy makers?

• Economic growth, low unemployment, and stable prices

• High inflation, high interest rates, and high taxes

• Government control, income inequality, and international trade

• Consumer spending, business investment, and government spending

Multiple Choice

What is Gross Domestic Product (GDP)?

• The value of all final goods and services produced within a country's border in a specific period of time

• The total amount of money in circulation within a country

• The total value of a country's exports minus imports

• The amount of money earned by the government through taxes

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What does Real GDP represent?

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GDP adjusted for inflation

GDP measured in raw number of things produced

GDP including illegal activities

GDP including household production

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What does the decrease in Real GDP in Greece indicate?

Select answer

Multiple Choice

How is the unemployment rate calculated?

• Number of unemployed people divided by the number of people in the labor force, times 100

• Number of unemployed people divided by the total population, times 100

• Number of unemployed people divided by the number of employed people, times 100

• Number of unemployed people divided by the number of discouraged workers, times 100

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What is frictional unemployment?

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Temporary unemployment or being between jobs

Unemployment due to lack of demand for a specific type of labor

Unemployment caused by a recession

Unemployment caused by technological advancements

Multiple Choice

What is the natural rate of unemployment?

• Unemployment rate when there is only frictional and structural unemployment

• Unemployment rate when there is 0% unemployment

• Unemployment rate when there is only cyclical unemployment

• Unemployment rate when there is only structural unemployment

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Why is falling prices (deflation) considered bad for the economy?

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It discourages people from spending

It increases the purchasing power of money

It leads to higher business costs

It stimulates economic growth

Multiple Choice

What is the business cycle?

• The expansion and contraction of an economy over time

• The fluctuation of interest rates in the stock market

• The rise and fall of consumer spending

• The increase and decrease of government debt

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Which component of GDP accounts for the highest percentage in most economies?

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Consumer spending

Business spending (investment)

Government spending

Net exports

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What is one way the government can stimulate the economy during a recession?

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Increase spending or cut taxes

Decrease spending or increase taxes

Implement strict regulations on businesses

Print more money

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What is one drawback of government stimulus during a recession?

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Increased debt

Decreased inflation

Higher interest rates

Reduced consumer spending

Multiple Choice

What is the main purpose of studying macroeconomics?

• To understand how the whole economy works

• To predict stock market trends

• To analyze individual consumer behavior

• To calculate market prices

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A used car counts toward GDP

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True

False