Macro - Unit 2 Test Review

Term: frictional unemployment

• the interest rate as usually reported without a correction for the effects of inflation

• unemployment that occurs when people take time to find a job

• unemployment that occurs when workers' skills do not match the jobs that are available

• the periodic rise and fall of economic activity

Term: Unanticipated inflation

• helps borrowers and hurts lenders.

• benefits lenders and disadvantages borrowers.

• has no effect on either borrowers or lenders.

• creates equal advantages for both parties.

Term: Calculating GDP via the factor payments approach would include payments such as:

• wages, interest payments, rent and profits.

• sales revenue, dividends, and stock options.

• government subsidies, tax credits, and grants.

• consumer spending, savings, and investments.

Inflation is:

• A general and progressive increase in prices

• the process of bringing the inflation rate down

• A situation in which prices are declining

• A very rapid rise in the price level; an extremely high rate of inflation

Disinflation is:

• the process of bringing the inflation rate down

• A situation in which prices are declining

• the costs of changing prices

• A very rapid rise in the price level; an extremely high rate of inflation

Gross Domestic Product (GDP) in a nation is:

• engaged in a job search

• the total dollar value of all final goods and services produced in the nation's economy in a year

• the total amount of money held by the government in a year

• the total number of jobs created in the economy during a year

What is hyperinflation?

• A situation in which prices are declining

• Arise from the way inflation makes money a less reliable unit of measurement

• The process of bringing the inflation rate down

• A very rapid rise in the price level; an extremely high rate of inflation.

What is the expenditure approach?

• GDP divided by population

• C + I + G + (X-M)

• U/LF x 100

• The costs of changing prices

Which are the two markets represented in the simplest circular-flow diagram?

• The market for exports and the market for imports.

• The market for goods and services and the market for factors of production.

• The market for labor and the market for capital.

• The market for financial assets and the market for commodities.

To be counted as unemployed, one must:

• be out of work and be actively looking for a job.

• be retired and not seeking employment.

• be employed but seeking a better job opportunity.

• be receiving unemployment benefits without seeking work.