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WorksheetsUnit 2 GPD, Unemployment and Inflation
Total questions: 30
Worksheet time: 1hrs 7mins
Name
Class
Date
1.
In the 1980’s and 1990’s, the gap between high income and low income families widened for all of the following reasons EXCEPT
a)
the sharp increase in the cost of living
b)
economy changing from a goods producing economy to service economy
c)
the decline of unions
d)
a widening gap between well educated and poorly educated workers
2.
If a company lays off workers when the business cycle is going up (the economy is booming), what kinds of goods to this company most likely produce?
a)
normal goods
b)
inferior goods
c)
technological goods
d)
capital goods
3.
A rise in general price levels or too many dollars chasing too few goods are definitions of
a)
unemployment
b)
recession
c)
inflation
d)
welfare
4.
Why is disposable personal income an important factor in measuring the economy’s health?
a)
when it is high, government debts are low
b)
it represents the actual money people have to spend, invest, and save in the economy
c)
when it is low, it shows that businesses are investing money back into the economy
d)
when it is high, it allows for higher government revenues and greater transfer payments
5.
A business buys new computers for it’s office workers from a U.S. computer manufacturer. The value of the transaction would be included in which GDP category?
a)
consumer sector
b)
investment sector
c)
net exports
d)
government sector
6.
a)
A = Recession
b)
A = Peak/Boom
c)
A = Expansion
d)
A = Trough
7.
a)
D = Recovery/Expansion
b)
D = Recession
c)
D = Peak/Boom
d)
D = Trough
8.
Why is real GDP more accurate than nominal GDP?
a)
It is adjusted for depreciation.
b)
It includes unpaid and paid work.
c)
It is adjusted for price changes.
d)
It includes unrecorded business.
9.
How can an economist compare the standard of living in two different countries?
a)
by comparing real GDP per capita
b)
by looking at the quality of life
c)
by seeing how the GDP is distributed
d)
by measuring physical capital
10.
Products that would be used in calculating the United States GDP include
a)
toys manufactured in China at a factory owned by a U.S. company.
b)
cars manufactured in Tennessee at a factory owned by a Japanese automobile company.
c)
plastic manufactured in a factory in Kentucky and sold to toy manufacturers around the world to make plastic toys.
d)
cotton cloth manufactured in India and sold to clothes makers in the United States.
11.
The calculation of GDP would include
a)
profits on the sale of a 25-year-old house.
b)
the monetary value of someone babysitting in exchange for a room.
c)
the income of a high school English teacher.
d)
the price of the steel used to build a new hotel.
12.
Which of the following is an illustration of how fears of future economic problems affect GDP?
a)
Businesses will invest more money in the short term to ensure higher profits in the future; GDP will then be pushed up.
b)
Consumers will spend more money in the short term to prevent future economic problems; GDP will be pushed up.
c)
Government will spend less and save money in anticipation of future economic contraction; GDP will be reduced.
d)
Consumers will spend less and save money in case future economic problems affect them; GDP will be reduced.
13.
Based on the following equation, what does "Y" represent?
Y = C+I+G+Xn
Y = C+I+G+Xn
a)
Inflation
b)
GDP
c)
Gross National Product
d)
Personal income
14.
Based on the following equation, what does "Xn" represent?
Y = C+I+G+Xn
Y = C+I+G+Xn
a)
Imports
b)
Exports
c)
Net exports
d)
Consumption
15.
If the economy is at full employment, then the unemployment rate
a)
is below the natural rate of unemployment
b)
is equal to the natural rate of unemployment
c)
is equal to zero
d)
is greater than the natural rate of unemployment
16.
Which of the following is considered a cause of inflation?
a)
Wages go down.
b)
Producers raise prices to meet higher costs.
c)
There is not enough money in the economy.
d)
Demand is less than supply.
17.
The “market basket” used by the Bureau of Labor Statistics to calculate prices is made up of which of the following?
a)
nonfood items purchased by adult consumers
b)
food items purchased by rural families
c)
goods and services for a typical urban consumer
d)
food and necessary services for any family
18.
What is the main problem for people on a fixed income during a period of chronic inflation?
a)
Their income will not increase, so their purchasing power falls.
b)
They have to ask for an increase in wages to match inflation.
c)
Their investments will not pay as much interest.
d)
They have to wait for the government to react to the crisis.
19.
Which of the following is the correct way to calculate the unemployment rate?
a)
number of unemployed divided by total population, times 100
b)
number of employed minus unemployed divided by labor force, times 100
c)
number of unemployed divided by labor force, times 100
d)
number of employed minus labor force divided by employed, times 100
20.
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at a large urban university, she is
a)
frictionally unemployed
b)
structurally unemployed
c)
cyclically unemployed
d)
underemployed
21.
A knitting factory worker who loses her job when the factory is sold and converted to a high-tech computer lab is an example of
a)
frictional unemployment
b)
structural unemployment
c)
cyclical unemployment
d)
seasonal unemployment
22.
Jim no longer has a job as a stock broker since 2008 due to the great recession. He is experiencing what kind of unemployment?
a)
Cyclical
b)
Structural
c)
Seasonal
d)
Frictional
23.
Seth is laid off from work because he is a life guard at the local water park. He is experiencing what kind of unemployment?
a)
Structural
b)
Seasonal
c)
Frictional
d)
Cyclical
24.
An index that measures the prices of a market basket of goods that typical consumers purchase. Put it another way, measures inflation
a)
Consumer Price Index
b)
Federal Reserve
c)
Bank
d)
Deflation
25.
Which letter represents the Contractionary (Recession) Phase?
a)
A
b)
B
c)
C
d)
D
26.
recurring periods of expanding and contracting economic activity
a)
Gross Domestic Product
b)
Business cycle
c)
National Income Accounting
d)
Microeconomics
27.
Full Employment means a 0% unemployment rate
a)
True
b)
False
28.
What type of GDP is calculated with the current year's prices?
a)
Nominal GDP
b)
Real GDP
c)
GDP per capita
29.
Dover Downs will sell millions of dollars of NASCAR merchandise on race weekend. Will this be included in GDP?
a)
Yes - Investment
b)
Yes - Consumer Spending
c)
No - used items
d)
No - intermediate goods
30.
The value of the output of all final goods and services produced within a country in a year.
a)
total ouput
b)
Gross Domestic Product
c)
national income
d)
net domestic product
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