Chapter 2 Test–Economic Activity

Only final goods are counted when GDP is measured.

• True

• False

The main cause of unemployment is reduced demand for the goods and services being provided by various workers.

• True

• False

If wages increase faster than gains in productivity, the cost of producing goods decrease and prices fall.

• True

• False

Some nations have such abundant resources that they never experience economic bad times.

• True

• False

The last depression in the United States occurred during the 1980s.

• True

• False

Inflation can sometimes occur when the demand for goods and services is greater than the supply.

• True

• False

People with poor credit ratings pay a higher interest rate to borrow money than people with good credit ratings.

• True

• False

In the United States, the personal savings rate is rather high.

• True

• False

When you buy a corporate bond, you have lent money to the company.

• True

• False

A well-run business should never need to borrow money.

• True

• False