MA52 Unit 6 Part 2

Why does the Federal Reserve System raise interest rates?

• To fight inflation

• To increase demands for products

• To decrease supply of products

• To overcome inequalities of income distribution

Why do governments usually calculate the unemployment rate on a 

monthly basis?

• To detect changes in the economy

• To help workers find new jobs

• To determine which businesses are failing

• To prepare for receiving less tax money

Fluctuations in interest rates often have an impact on the use of which factor or factors?

• Tax incentives

• Credit

• Discounts

• Rebates

A person who quits one job and spends a short amount of time out of work while looking for a new position is experiencing which type of 

unemployment?

• Seasonal

• Structural

• Cyclical

• Frictional

What often happens to an economy during a mildly inflationary period?

• Increased growth

• Decreased prosperity

• Decreased profits

• Increased unemployment

If transfer payments were counted in calculating gross domestic product, what would the GDP do?

• Appear to be greater than it actually is

• Appear to be less than it actually is

• Exclude government spending

• Be unaffected

When inflation rate is low, prices tend to experience which situation?

• Remain stable

• Increase dramatically

• Fluctuate daily

• Reduce currency values

Why should a businessperson understand business cycles?

• To prevent the cycles from happening

• To make plans that will help to level out cycles

• To determine the cause of each cycle

• To predict the exact beginning of cycles

Which transaction would be counted in the gross domestic product?

• A florist purchases plants from a nursery.

• A bakery purchases 50 pounds of sugar.

• A customer purchases a sweater.

• A restaurant purchases meat from a wholesaler.

How does double counting affect the gross domestic product?

• It causes trade surpluses, which help the GDP.

• It decreases the GDP.

• It inflates the GDP.

• It causes economic declines, which hurts the GDP.