Unit 3 Test Review

The business cycle describes the fact that

• unemployment levels are constantly changing.

• an economy's GDP fluctuates between times of recession and expansion.

• inflation rates are constantly changing.

• politicians usually pass laws that cause the economy to react in unpredictable ways.

In the long run, the economy of the United States has

• steadily grown over time.

• steadily declined over time.

• behaved in ways that cannot be explained by modern macroeconomics.

• experienced drastic fluctuations, but it is back to its old levels now.

The general relationship between GDP & unemployment can be described as

• direct; meaning that an increase in one variable usually signals an increase in the other variable.

• inverse; meaning that an increase in one variable usually signals a decrease in the other variable.

During recessions all of the following usually happen EXCEPT

• GDP decreases.

• unemployment increases.

• inflation increases.

• inflation decreases.

When the economy experiences expansion, it is most likely the case that

• GDP is increasing, unemployment is increasing, and inflation is decreasing.

• GDP is increasing, unemployment is decreasing, and inflation is increasing.

• GDP is decreasing, unemployment is decreasing, and inflation is increasing.

• GDP is decreasing, unemployment is decreasing, and inflation is decreasing.

GDP is an important economic measurement because it

• provides valuable data on unemployment rates.

• measures the combined total of all intermediate and final goods produced.

• measures all final goods and services produced by a country.

• includes all economic activity, incluing financial transactions and purchases of used goods.

Which of the following is NOT included when calculating GDP for the United States?

• Cars manufactured in Japan, but sold in the United States.

• Cars manufactured in the United States, but sold in Japan.

• Cars manufactured in Michigan, but sold in Minnesota.

• Cars manufactured in Michigan, but sold to the government.

Which of the following statements is about nominal and real GDP is true?

• Nominal and real GDP may have different levels, but they are always increasing.

• Nomindal GDP is a more useful measurement when comparing levels of GDP over time.

• Nominal GDP is always a a larger number than real GDP.

• Nominal and real GDP are always the same in whichever base year has been chosen for calculation.

All of the following people are considered EMPLOYED except

• Jen, who has been home sick for the last two weeks.

• Peter, who has only worked at his job for 3 hours last week.

• John, who has been on vacation from his job for one week.

• Harold, who began his job three weeks ago on his 15th birthday.

All of the following people are considered UNEMPLOYED except

• Molly, who filled out three job applications this week.

• Ryan, who currently serves in the military.

• Kyle, who only worked for 30 minutes last week.

• Brittany, who was recently fired from her job.