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Unit 4: GDP, Inflation, the Business Cycle, & Unemployment

Total questions: 75

Worksheet time: 1hrs 3mins

Name
Class
Date
1.

Which of the following would be included in calculating GDP?

a)

GDP is the sum of the prices of all final goods and services produced within one country.

b)

GDP is the sum of the prices of all final goods and services purchased by one country.

c)

GDP is the sum of the prices of all intermediate and final goods and services within one country.

d)

Intermediate goods

e)

What is GDP?

2.

Jose just purchased new tires for his ten-year-old car. Is this purchase counted towards GDP?

a)

Yes.

b)

No.

3.

Which of the following accounts for the biggest portion of GDP in the United States?

a)

Consumption

b)

Business Investment

c)

Government Spending

d)

Net Exports

4.

Which of the following helps economists better understand a nation's standard of living?

a)

Net Exports

b)

GDP per capita

c)

Business Investment

d)

Nominal GDP

5.

What is the unemployment rate?

a)

The total population of a country divided by people who are employed (times 100).

b)

The number of people over 16 actively looking for work divided by the number of people in the labor force (times 100).

c)

The number of jobless people actively looking for work divided by the number of people in the labor force (times 100).

d)

The total population of a country divided by people who are unemployed (times 100).

6.

Which of the following people would count towards the labor force?

a)

Peter is a homemaker with 4 children.

b)

Kiley is retired and now volunteers her time to the local library.

c)

Lawrence is 15 and can't wait to get his first job.

d)

Aaron works a few hours a week bartending.

7.

Joann has a master's degree in education. She currently works at a local fabric store. How would she be categorized by the BLS?

a)

Employed

b)

Unemployed

c)

Underemployed

d)

Not in the Labor Force

8.

Kurt runs his own business producing music and selling it online. How would he be categorized by the BLS?

a)

Employed

b)

Unemployed

c)

Underemployed

d)

Not in the Labor Force

9.

Todd was just laid off from his job due to an economic downturn. What type of unemployment is he experiencing?

a)

Seasonal

b)

Cyclical

c)

Structural

d)

Frictional

10.

In the summer, Ashley works for a local farmer. She picks strawberries so she can save up for college. Once winter hits, she stops working in the fields and looks for a new job. What type of unemployment is she experiencing?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

11.

Charlie's father used to work in a factory twisting lids onto bottles. However, his father was recently laid off because the company purchased a robot that can do the job more efficiently. What type of unemployment is he experiencing?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

12.

Which of the following terms refers to the average increase of prices across an economy in a given month or year?

a)

Unemployment

b)

Inflation

c)

gross domestic product

d)

consumer price index

13.

Which of the following is used to measure inflation from year to year?

a)

Consumer Peace Index

b)

Consumer Price Index

c)

Supply & Demand

d)

Market Value of Homes

14.

True or false: recessions usually last at least 6 months.

a)

True

b)

False

15.

What is the business cycle?

a)

The growth and decline of an economy as economic activity increases and decreases periodically.

b)

It measures the growth and decline of businesses' performance over the course of a year.

c)

The cycle of growth and decline of the stock market over the course of a year.

d)

The cycle businesses go through when they first open their doors.

16.

Which of the following terms refers to goods and services brought into the US from other country to sell to American consumers?

a)

GDP

b)

Factors of Production

c)

Imports

d)

Exports

17.

Which of the following terms refers to goods and services produced in the US and sold abroad?

a)

Exports

b)

Imports

c)

Factors of Production

d)

GDP

18.

Gross Domestic Product is a method for calculating how much a country produces by adding which four spending categories?

a)

Consumption, Investment, Government, Net Exports

b)

Consumption, Investment, Government, Business expenditures

c)

Consumption, Interest Rates, Government, Net Exports

d)

Wages, Rent, Interest, Profit

19.

A market basket is generally used to

a)

advertise new products for companies.

b)

compare prices of goods between years to calculate the consumer price index.

c)

determine the total amount of real gross domestic product.

d)

compare prices of goods between competing stores.

20.

The best definition of inflation is:

a)

No changes in the price level

b)

Fluctuations in the price level

c)

A rise in the price level

d)

A decrease in the price level

21.

Comparing real GDP between two consecutive years is MOST useful in determining which economic measurement?

a)

Economic growth

b)

Equity

c)

Exchange rates

d)

Equilibrium price

22.

Old MacDonald purchases a new John Deere tractor for use on his farm. Is this purchase included in the GDP calculation?

a)

Yes

b)

No

23.

Luigi the Plumber purchases a two-year old used truck. Is this purchase included in the GDP calculation?

a)

Yes

b)

No

24.

Bob the Barber makes $400 cutting hair for the week. Is this service included in the GDP calculation?

a)

Yes

b)

No

25.

You buy a $10 ticket to watch the latest Marvel movie. In which sector of the GDP equation would this transaction be included?

a)

Consumer Spending

b)

Investment Spending

c)

Government Spending

d)

Net Exports

26.

The U.S Air Force buys 5 new fighter jets for $2 billion Which sector of the GDP equation would include this purchase?

a)

Consumer Spending

b)

Investment Spending

c)

Government Spending

d)

Net Exports

27.

You buy a new Toyota Tacoma that was made in Japan. Which sector of the GDP equation would include this purchase?

a)

Consumer Spending

b)

Investment Spending

c)

Government Spending

d)

Net Exports

28.

General Motors invests in new machinery for car production. Which component of the GDP equation would this expenditure fall under?

a)

Consumer Spending

b)

Investment Spending

c)

Government Spending

d)

Net Exports

29.

What is a continuous rise in price levels over time?

a)

Gross Domestic Product

b)

Inflation

c)

Unemployment

30.

Which of the following is used to calculate GDP?

a)

Used textbook

b)

IMB stocks

c)

Toaster made in Mexico

d)

New Prius assembled in Texas

31.

What is subtracted when calculating GDP?

a)

Exports

b)

Consumer spending

c)

Imports

d)

Investment

32.

When unemployment is increasing and production is decreasing a country's economy is heading into a ___________

a)

Recession

b)

Expansion

c)

Development

d)

Peak

33.

When unemployment is decreasing, production is increasing, inflation may also be increasing a country's economy is heading into an ___________

a)

Recession

b)

Expansion

c)

Development

d)

Peak

34.

When an economy is in a recession and moving toward a trough it is said to be which of the following

a)

Contraction

b)

Expansion

c)

Peak

d)

Trend

35.

Which type of unemployment is when you are between jobs or first looking for a job?

a)

Frictional

b)

Structural

c)

Cyclical

36.

Which type of unemployment is it when you must get retrained because your job has been lost because of new technology or changes in competition or regulation

a)

Frictional

b)

Structural

c)

Cyclical

d)

Seasonal

37.

Which type of unemployment is it when you are laid off because of a downturn in the economy?

a)

Frictional

b)

Structural

c)

Cyclical

d)

Seasonal

38.

In the business cycle, at what point is unemployment at its lowest and productivity at its highest?

a)

Trough

b)

Peak

c)

Expansion

d)

Recession

39.

In the business cycle, at what point is unemployment at its highest and productivity at its lowest?

a)

Trough

b)

Peak

c)

Expansion

d)

Recession

40.

What are the criticisms of the unemployment rate?

a)

Discouraged workers: some people are no longer looking for a job because they have given up.

Underemployed workers: Someone who wants more hours but can't get them is still considered employed

b)

Percent of population in the labor force. If people leave the labor force, the unemployment rate falls.

c)

Index numbers assigned to each year that show how prices have changed relative to a specific base year (base year given 100)

d)

Unemployment caused by a recession. As demand for goods/services falls, demand for labor falls and workers are fired

41.

How do you calculate the unemployment rate?

a)

Percent of people unemployed(# unemployed)/(# in labor force) x 100

b)

Frictional + structural unemployment

c)

% change in prices = (year 2 - year 1)/(year 1) x 100

42.

Who is in the labor force?

a)

-Above 16 years; -Able/willing to work

b)

All of these are correct.

c)

-Not institutionalized (jail/hospital)

d)

-Not in military, in school full time, or retired

43.

What type of unemployment occurs during a transition period from one job to another job?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

44.

What type of unemployment occurs when advanced technology takes your job?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

45.

What type of unemployment is due to a business shutting down for a part of a year?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

46.

Radio Shack filed for bankruptcy resulting in their employees facing what type of unemployment?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

47.

A worker who leaves their job at an eye doctor's office, but hasn't started their new job at a school. What type of unemployment are they categorized in?

a)

Frictional

b)

Structural

c)

Seasonal

d)

Cyclical

48.
Which of the following would NOT be considered part of the labor force?
a)
Tyler, a banker who feels he is overqualified for his job.
b)
Savana, who is unemployed but has attended  three job interview in the last month.
c)
Ricky, who has a part-time job but wants a full-time job.
d)
Garrett, a stay-at-home dad.
49.
Which of the following is true about the natural rate of unemployment?
a)
It can vary over time.
b)
It is 2 percent orless of the civilian laborforce.
c)
It is equal to the structural unemployment rate.
d)
 It allows for some frictional and cyclical unemployment.
50.
During a recession, which of the following is likely to occur?
a)
an increase in real wages
b)
an increase in production
c)
and increase in the GDP growth rate
d)
an increase in the unemployment rate
51.
The unemployment rate is calculated as the number of
a)
unemployed persons divided by number of employed persons
b)
persons in the labor force divided by the number of unemployed
c)
unemployed divided by size of the labor force
d)
employed persons divided by number of unemployed persons
52.
Mr. Johns is quitting his job as a teacher and moving to california. He is
a)
Cyclically unemployed
b)
Seasonally Unemployed
c)
Structurally Unemployed
d)
Frictionally Unemployed
53.
Which of the following will most likely occur during the expansionary phase of the business cycle? 
a)
Real GDP rises and unemployment falls.
b)
Real GDP rises and unemployment rises. 
c)
Real GDP declines and inflation rises.
d)
Interest rates rise and the number of business failures rise. 
54.

Which is not the type of unemployment?

a)

frictional

b)

functional

c)

cyclical

d)

structural

55.

What does GDP stand for?

a)

Gross Domain Profit

b)

Grand Deer Pillows

c)

Great Dude Prizes

d)

Gross Domestic Product

56.

What is the GDP of the following economy?

a)

1000

b)

37

c)

125

d)

180

57.

What is the acceptable rate of unemployment?

a)

10% - 15%

b)

< 5%

c)

1% - 2%

d)

7% - 12%

58.

Which of the following would NOT cause Unemployment?

a)

A change in seasons.

b)

A mismatch between jobs available and worker skills

c)

A decrease in taxes.

d)

A person just graduated from college, and is looking for a job.

59.

What is the "acceptable" rate of Inflation?

a)

2-3%

b)

3-5%

c)

10-15%

d)

20-23%

60.

What is happening at point "1" in the image?

a)

Peak - GDP is at its highest point

b)

Contraction - GDP is decreasing (going down)

c)

Trough - GDP is at its lowest point

d)

Recovery - GDP is improving

e)

Expansion - GDP is growing past its original high point

61.

What is happening at point "2" in the image?

a)

Peak - GDP is at its highest point

b)

Contraction - GDP is decreasing (going down)

c)

Trough - GDP is at its lowest point

d)

Recovery - GDP is improving

e)

Expansion - GDP is growing past its original high point

62.

What is happening at point "3" in the image?

a)

Peak - GDP is at its highest point

b)

Contraction - GDP is decreasing (going down)

c)

Trough - GDP is at its lowest point

d)

Recovery - GDP is improving

e)

Expansion - GDP is growing past its original high point

63.

What is happening at point "4" in the image?

a)

Peak - GDP is at its highest point

b)

Contraction - GDP is decreasing (going down)

c)

Trough - GDP is at its lowest point

d)

Recovery - GDP is improving

e)

Expansion - GDP is growing past its original high point

64.

Which of the following is a positive/good thing about raising minimum wage?

a)

Minimum wage leads employers to hire more employees.

b)

Minimum wage allows low-income workers to make enough money to survive.

c)

Minimum wage leads employers to cut costs by firing many of their workers.

65.

Which of the following is a Negative/Bad thing about raising minimum wage?

a)

Minimum wage leads employers to hire more employees.

b)

Minimum wage helps poor workers make enough money to live a better life.

c)

Minimum wage can lead to employers firing employees to cut costs.

66.

Which of the following is the BEST definition of Inflation?

a)

A decrease in prices and an increase in the value of money.

b)

An increase in prices and a decrease in the value of money.

c)

A sudden decrease in prices and an increase in the value of money.

67.

How do we measure Inflation?

a)

GDP - Gross Domestic Product

b)

CPI - Consumer Price Index

c)

FBI - Federal Bureau of Investigation

d)

CSI - Customer Service Industry

68.

What is the effect Inflation has on Purchasing Power?

a)

Inflation causes your money to gain more value.

b)

Inflation causes interest rates to rise

c)

Inflation causes your money to lose value

69.
Which of the following expenditures would not be included in GDP?
a)
Purchase of a new lawnmower.
b)
Purchase of a silver cup previously sold new in 1950.
c)
Purchase of a ticket to the latest movie.
d)
All of these would be counted in GDP.
70.
A worker who was laid off due to a downturn in the business cycle would be considered
a)
frictionally unemployed.
b)
structurally unemployed.
c)
cyclically unemployed.
d)
seasonally unemployed.
71.

What is the definition for unemployment?

a)

The market value of all final goods and services produced in a nation during a period of time, usually a year.

b)

The increase of general prices over time.

c)

When people do not have jobs and are actively looking for one.

72.
If you live on a fixed income, how will you be affected by inflation.
a)
You are hurt because your purchasing power has decreased.
b)
You are helped because your purchasing power has increased.
c)
You are helped because interest rates rise.
d)
You are hurt because interest rates rise.
73.

Which of the following would be included in the calculation of GDP?

a)

Final goods

b)

Intermediate goods

c)

Second hand goods

d)

Black market activity

74.

A U.S. business buys new computers for its office workers from a U.S. computer manufacturer. The value of the transaction would be included in which category in the graph?

a)

Consumer sector

b)

Investment sector

c)

Government sector

d)

Net Exports

75.

Inflation in excess of 500 percent per year is called

a)

demand-pull

inflation

b)

cost-push inflation

c)

stagflation

d)

hyperinflation

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