chapter 3 test study guides

Question 1

gross domestic product (GDP)

Answer 1

the total value of the goods and services produced in a country in a given year

Question 2

standard of living

Answer 2

the level of material comfort as measured by the goods and services that are available

Question 3

inflation

Answer 3

a general increase in the cost of goods and services

Question 4

deflation

Answer 4

a general decrease in the cost of goods and services

Question 5

budget deficit

Answer 5

when the government spends more on programs than it collects is taxes

Question 6

budget surplus

Answer 6

a situation in which a government revenue exceeds its expenditures during a one-year period

Question 7

national debt

Answer 7

the total amount of money a government owes

Question 8

business cycle (wave)

Answer 8

the ruse and fall of economic activity over time

Question 9

prosperity

Answer 9

a peak of economic activity

Question 10

recession

Answer 10

a slow down of economic activity

Question 11

depression

Answer 11

a deep recession that affects the entire economy and lasts for several years

Question 12

recovery

Answer 12

a rise of business activity after a recession or depression

Question 13

what were the 4 types of economic shifts that the US experienced

Answer 13

1600s-bartering and trading, 1700s-farming,1850s-the Industrial Revolution, present day- the invention of computers

Question 14

what does the unemployment rate measure

Answer 14

the number of people who are able and willing to work but can’t find a job

Question 15

what impact does supply and demand have on inflation

Answer 15

demand goes up, supply goes down

Question 16

what impact does supply and demand have on deflation

Answer 16

demand goes down, supply goes up

Question 17

what are the 4 stages of the business cycle

Answer 17

prosperity, depression, recession, recovery

Question 18

what are some ways to measure a nation’s economic activity

Answer 18

gdp, national debt, inflation, standard of living, unemployment

Question 19

what is the main source of income for our government

Answer 19

taxes

Question 20

what caused the Great Depression and what are the characteristics that exist during a depression

Answer 20

October 29, 1929- stock market crashed, banks failed (ran out of money), high unemployment, low production of goods and services

Question 21

who is the federal reserve and what do they do

Answer 21

government agency that guides the economy, regulates the amount of $ in circulation, control interest rates, control amount of $ loaned

Question 22

what are the 4 types of unemployment

Answer 22

temporary, seasonal, changes in industry (job not needed), entire economy