GDP and Business Cycle

What are the two parts of economics?

• Microeconomics and macroeconomics

• Supply and demand

• Gross Domestic Product and unemployment

• Inflation and interest rates

What is the main focus of macroeconomics?

• Studying economic aggregates

• Analyzing individual consumer behavior

• Calculating market prices

• Predicting stock market trends

What are the three economic goals of policy makers?

• Economic growth, low unemployment, and stable prices

• High inflation, high interest rates, and high taxes

• Government control, income inequality, and international trade

• Consumer spending, business investment, and government spending

What is Gross Domestic Product (GDP)?

• The value of all final goods and services produced within a country's border in a specific period of time

• The total amount of money in circulation within a country

• The total value of a country's exports minus imports

• The amount of money earned by the government through taxes

What does Real GDP represent?

• GDP adjusted for inflation

• GDP measured in raw number of things produced

• GDP including illegal activities

• GDP including household production

What does the decrease in Real GDP in Greece indicate?

• A recession

• Economic growth

• Stable prices

• High unemployment

How is the unemployment rate calculated?

• Number of unemployed people divided by the number of people in the labor force, times 100

• Number of unemployed people divided by the total population, times 100

• Number of unemployed people divided by the number of employed people, times 100

• Number of unemployed people divided by the number of discouraged workers, times 100

What is frictional unemployment?

• Temporary unemployment or being between jobs

• Unemployment due to lack of demand for a specific type of labor

• Unemployment caused by a recession

• Unemployment caused by technological advancements

What is the natural rate of unemployment?

• Unemployment rate when there is only frictional and structural unemployment

• Unemployment rate when there is 0% unemployment

• Unemployment rate when there is only cyclical unemployment

• Unemployment rate when there is only structural unemployment

Why is falling prices (deflation) considered bad for the economy?

• It discourages people from spending

• It increases the purchasing power of money

• It leads to higher business costs

• It stimulates economic growth