American Government Unit 3 Midterm Quiz

What is Gross Domestic Product?

• The total value of all goods and services a country imports.

• The total value of all goods and services a country exports.

• The total value of all goods and services produced within a country in one year.

• The net loss in profits within a country due to imports.

Typically the greater a country’s GDP, the better the country’s standard of living.

• True

• False

What factors lead to a country’s economic growth?

• investment in human capital, investment in physical capital, land (natural resources), entrepreneurship

• good international relations, a democratic president, strict laws, freedom of press

• a powerful military, strong dictatorial leadership, communist regime, little personal freedom

• a monarchy, the World Bank, a parliamentary democracy, personal freedom

Why is it beneficial for a country to have an abundance of natural resources?

• countries that have a lot of natural resources are able to use them to produce goods and services cheaper than a country that has to import them. Therefore, a country with a lot of natural resources usually has a greater GDP than a country with little natural resources.

• countries with a lot of natural resources are usually taken over by other countries and don't have to worry about paying for anything

• they cannot become communist

• there is no advantage since most natural resources are worthless

____ is the fee charged for the right to borrow money.

• Loan

• Credit

• Interest

• Income

___ monitors the financial system to help ensure a healthy economy.

• The Federal Reserve

• Our Central Bank

• The Fed

• All of the above

During economic expansion, GDP indefinitely increases

• True

• False

The following are economic indicators...

• Jobs, money, stocks

• Inflation, unemployment, GDP, CPI, DJIA

• Expansion, recession, depression, peak, trough

Fiscal policies are government policies about taxing and spending.

• True

• False

Roads, education, and the military can be examples of which type of expense?

• Necessary

• Discretionary