Chapter 2 Economic Activity Review

One component of gross domestic product is the value of a country’s exports plus the value of the imports into the country.

• True

• False

The portion of people in the labor force who are not working is the ____________________ rate.

____________________ occurs at the peak of the business cycle.

• Recovery

• Depression

• Recession

• Prosperity

Which of the following is NOT a characteristic of a depression?

• high demand for goods and services

• a prolonged period of high unemployment

• business failures

• GDP falls rapidly

Inflation

• increases the buying power of the dollar.

• always discourages economic growth.

• tends to decrease wages.

• is most harmful to people living on fixed incomes.

____________________ represents ownership, or equity, in a corporation.

If you purchase a corporate or government bond, you are a(n)

• creditor

• stockholder

• entrepreneur

• partner

Mikayla is a 14-year-old student. She would not be considered part of the labor force in the United States.

• True

• False

The money for capital projects comes from three main sources: stock investments, bonds, and personal savings.

• True

• False

Personal ____________________ refers to salaries and wages as well as investment income and government payments to individuals.