GDP Sections 2 and 3

What is inflation?

• When prices of goods and services go down
• When prices of goods and services stay the same
• When prices of goods and services go up over time
• When people save more money

What is a market basket used for?

• To carry groceries from the store
• To measure how prices change over time
• To store money safely
• To trade goods between countries

Who usually benefits from inflation?

• People who lend money
• People with fixed incomes
• People who save cash
• People who borrowed money with fixed-rate loans

What does GDP measure?

• The total value of goods and services made in a country
• The amount of money people save
• The number of jobs available
• The price of food only

Which type of GDP tells us the true growth of an economy?

• Average GDP
• Real GDP
• Future GDP
• Nominal GDP

What happens during the "trough" of a business cycle?

• The economy is growing quickly
• Prices are very high
• The economy is at its lowest point
• Everyone has jobs

What is the Consumer Price Index (CPI) used for?

• To count how many consumers are in a country
• To measure how prices change over time
• To track what stores people shop at
• To calculate how much people spend on luxury items

What happens during a recession?

• Economic activity increases
• More jobs are created
• Economic activity decreases
• Prices stay the same

What is the base year important for?

• It's when the country was founded
• It's when prices are highest
• It's a reference point for measuring price changes
• It's when the most jobs are available

Which group is most hurt by unexpected inflation?

• People who borrowed money
• People with fixed incomes like retirees
• Business owners
• Government workers