Chapter 2 Quiz

Which of the following would NOT be included in a measure of GDP?

• Ivanhoe Publications exports $25 million of books to Ireland.

• The U.S. government buys office supplies worth $30 million from The Supply Closet.

• You give your car a tune-up and change the oil yourself.

An increase in GDP per capita means that

• an economy is growing

• an economy is in a recession

• unemployment is too high

• individuals are not saving enough.

In the United States, the labor force consist of all people above age ___ who are actively

working or seeking work.

• 21

• 18

• 16

• 14

A period of economic recovery

• is considered the high point of the business cycle

• is characterized by a rise in GDP

• usually causes businesses to lower production (d)

• is marked by widespread unemployment

Inflation

• is least harmful to people on fixed incomes

• causes the buying power of the dollar to increase

• generally occurs at the same rate from year to year

• can sometimes stimulate economic activity if it is kept relatively low

The interest rate financial institutions are charged to borrow funds from Federal Reserve banks is called the

• discount rate

• prime rate

• certificate of deposit rte

• T-bill rate

The money for capital projects usually comes from

• personal savings

• stock investments

• bonds

• all of the above

Which type of business sells stock?

• partnership

• corporation

• proprietorship

• all businesses sell stock

People who buy bonds are called

• debtors

• owners

• creditors

• consumers

The total amount owed by the federal government is called the

• budget surplus

• budget deficit

• balanced budget

• national debt