Inflation, Unemployment, GDP & Business Cycle

What is the best measure of a nation's standard of living?

• real GDP per capita

• population growth

• savings

• national income

A general increase in prices is called

• inflation

• purchasing power

• the CPI

• a price index

The inflation rate is

• the ability to buy goods or services

• measured in fixed dollars

• not an important measure to economists

• the percentage change in prices over time

Inflation reduces people's purchasing power because

• the same amount of money buys ore goods and services

• the same amount of money buys fewer goods and services

• the market basket has to be changed every year

• there is not enough money in the economy

Is this counted in the GDP of the US?

The federal government purchases a new submarine for the US Navy.

• Yes

• No

In which part of the GDP calculation does this fit?

You spend $15 at AMC to see the latest Avengers movie.

• Consumer spending

• Government spending

• Investment spending

• Net exports

What is the definition of deflation? 

• decrease in the average price of goods and services

• occurs when the price of goods and services rise

• increase in prices

• I don't know

What causes demand pull inflation?

• rise in price due to a decrease in supply
• a rise in price level due to an increase in consumption
• a rise in price due to an increase in the cost of production
• a decrease in price due to a decrease in supply

GDP that is adjusted for inflation

• real GDP
• nominal GDP
• price level
• net national product

A peak in business cycle is indicated by ______ unemployment and _______ output.

• higher ; lower

• lower ; higher

• decreasing ; increasing

• increasing ; decreasing