AP Macro Unit 2

What is inflation?

• The rate at which the general level of prices for goods and services is rising.

• The rate at which the general level of prices for goods and services is irrelevant.

• The rate at which the general level of prices for goods and services is staying constant.

• The rate at which the general level of prices for goods and services is falling.

Define unemployment.

• The state of being without a job or work, and not interested in seeking employment.

• The state of being without a job or work, but not actively seeking employment.

• The state of being without a job or work, and actively seeking employment.

• The state of being employed and actively seeking more work.

What does GDP stand for?

• Global Domestic Product

• Gross Domestic Profit

• Gross Domestic Product

• Government Development Program

Explain the circular flow model.

• The circular flow model represents the flow of money, goods, and services between households and firms in an economy.

• The circular flow model represents the flow of money, goods, and services between households and the stock market in an economy.

• The circular flow model represents the flow of money, goods, and services between households and banks in an economy.

• The circular flow model represents the flow of money, goods, and services between governments and firms in an economy.

What is the business cycle?

• The business cycle refers to the process of starting a new business.

• The business cycle refers to the process of buying and selling goods and services.

• The business cycle refers to the process of managing financial transactions.

• The business cycle refers to the fluctuations in economic activity that occur over time.

What are the causes of inflation?

• Decrease in money supply, deflation, decrease in demand, and stable expectations of future inflation.

• Increase in money supply, deflation, decrease in demand, and stable expectations of future inflation.

• Increase in money supply, demand-pull inflation, cost-push inflation, and expectations of future inflation.

• Increase in money supply, deflation, increase in demand, and stable expectations of future inflation.

What are the types of unemployment?

• frictional, structural, cyclical, and seasonal

• voluntary, involuntary, hidden

How is GDP calculated?

• By calculating the average income of all citizens in a country.

• By multiplying the total population of a country by the average income per capita.

• By summing up the total value of all goods and services produced within a country's borders during a specific time period.

• By adding up the total value of all imports and exports of a country.

What are the components of the circular flow model?

• Consumers, producers, banks, and trade unions.

• Individuals, corporations, banks, and non-profit organizations.

• Workers, employers, financial institutions, and international organizations.

• Households, firms, government, and the foreign sector.

What are the phases of the business cycle?

• Increase, summit, decrease, and low.

• Expansion, peak, contraction, and trough

• Growth, climax, decline, and bottom.

• Upswing, apex, downturn, and bottom.