Retrieval Summarizer 4.2

1. Historically, price levels have risen over time. When is inflation most likely to be problematic?

• In the short-run
• In the long-run
• Always

2. Which of the following forms of GDP is most useful when economists are determining which of two economies is better off?

• Nominal GDP
• Real GDP
• GDP per capita

3. In which situation is inflation most problematic?

• Making payments on a fixed-rate home loan
• Paying rent for an apartment
• Earning wages that are annually adjusted to reflect changes in the CPI

4. True or False, an unemployment rate of 2.9% means 2.9% of the total U.S. population is unemployed.

• True
• False

5. If the economy is experiencing an accelerating GDP growth rate, the inflation rate will most likely

• Increase
• Decrease
• Become negative

6. What does the Consumer Price Index (CPI) primarily measure?

• The average total spending by households in a year for goods and services
• The price level for a representative market “basket” of consumer goods and services
• The price level for all goods and services produced in an economy

7. Which type of underutilized labor is of least concern for economists?

• People who lost their job during a contractionary period
• People who are frustrated by the job search and have given up looking for work
• People who recently graduated and are looking for work for the first time

8. How does inflation affect the cost of living?

• It decreases the cost of living by increasing the value of money.
• It has no impact on the cost of living.
• It increases the cost of living by reducing the purchasing power of money.

9. Which of these points best represents an economy with an unusually high unemployment rate?

• Points K and I
• Points K and J
• Points I and L

10. Which of the following is most likely to cause an increase in the inflation rate?

• An increase in the overall savings rate in the economy.
• An increase in consumer demand for many goods and services.
• A decrease in production costs for many goods and services.