Measuring the Economy

To keep track of inflation, the government uses the

• gross national product.

• consumer price index.

• real GDP.

• NYSE.

The economy grows

• at a constant rate.

• at a constant increase.

• at a constant decrease.

• in alternating periods of growth and decline.

Which stage of the business cycle has the highest inflation rate?

• Expansion

• Peak

• Recession

• Trough

Which explanation best explains the effects of inflation?

• Consumers have more products to choose from.

• Inflation erodes (take away from) the purchasing power of the dollar.

• Inflation results in lower prices.

• Demand increases because prices are higher.

If we were to enter a period of recession, what

would likely happen to demand?

• it would increase because people could afford more

• it would decrease because people could not afford as much

• it would increase because the price of goods would increase

• it would decrease because supply and demand move in the same direction

GDP equals the value of all

• final goods and services produced.

• services and only services produced.

• goods and only goods produced.

• final goods and services consumed by households.

Using GDP to measure a standard of living can be inaccurate because

• our standard of living depends solely on goods and services.

• our standard of living only depends on used goods and services.

• our standard of living does not depend only on goods and services.

• we use nominal GDP instead of real GDP.

What is the lowest point of the cycle called?

• peak

• contraction

• expansion

• trough

The number of unemployed people as a percentage of the labor force

• Unemployment rate

• GDP

• GDP per capita

• Inflation

What causes inflation?

• inflation occurs when there's an increase in production costs OR when demand for products and services increases faster than supply

• inflation occurs when there's an increase in production costs OR when demand for products and services increases slower than supply

• inflation occurs when there's a slower increase in production costs OR when demand for products and services increases faster than supply