Econ

Question 1

Who makes up the labor force?

Answer 1

unemployed people who haven’t met retirement/are at the age to work and people that are currently employed

Question 2

Frictional

Answer 2

People taking time to find a job

Question 3

Seasonal

Answer 3

Industries slow down or cut back during certain seasons

Question 4

Structural

Answer 4

When workers skills do not match the available jobs

Question 5

Cyclical

Answer 5

Rises and falls according to the economy

Question 6

Define Inflation

Answer 6

An increase in the average price level of a nation’s output over time.

Question 7

Deflation

Answer 7

still inflation unless the numbers decrease into the negatives

Question 8

“Discouraged Worker”

Answer 8

a person of legal employment age who is not actively seeking employment or who has not found employment after long-term unemployment, but who would prefer to be working.

Question 9

three theories of Inflation

Answer 9

Demand - Pull,Cost - Push,Quantity

Question 10

Demand - Pull:

Answer 10

inflation occurs when demand for goods and services exceeds existing supplies

Question 11

Cost - Push

Answer 11

inflation occurs when producers raise prices in order to meet increased costs

Question 12

Quantity

Answer 12

Inflation that occurs when there is too much money in the economy

Question 13

2 ways to increase GDP

Answer 13

produce more goods and services
increase price on goods and services

Question 14

2 ways to decrease GDP

Answer 14

trade deficient (spend more on imports than exports)
unemployment

Question 15

Which 2 ways are used to calculate the GDP?

Answer 15

Nominal and real

Question 16

Nominal GDP -

Answer 16

measured in current price

Question 17

Real GDP

Answer 17

expressed in constant or unchanging prices

Question 18

Define the Consumer Price Index

Answer 18

a measure of the average change over time in the prices paid by consumers for a market basket of goods and services.

Question 19

the four stages of the business cycle

Answer 19

Expansion, Peal, Trough and contraction

Question 20

Explain the four stages of the business cycle

Answer 20

A period of macroeconomic expansion followed by a
period of contraction.

Question 21

Expansion -

Answer 21

GDP Grows, during this time businesses take the time to increase production and employment

Question 22

Peak -

Answer 22

economic indicators reach their highest level, after a peak is usually followed by a contraction

Question 23

Contraction

Answer 23

can be considered either a recession, depression, or stagflation, the economic output declines, GDP also declines and businesses lower production and employment

Question 24

Trough

Answer 24

occurs when a recession ends and economic recovery or expansion begins

Question 25

Describe the difference between Real GDP and Nominal GDP

Answer 25

Real GDP tracks the total value of goods and services calculating the quantities but using constant prices that are adjusted for inflation

nominal GDP, which does not account for inflation.

Question 26

Explain GDP and GNP

Answer 26

GDP is the value of the finished domestic goods and services with nation

GNP is the value of all finished goods and services produced by both domestic and abroad.

Question 27

“Natural Rate of Unemployment”

Answer 27

the ‘normal’ amount of people that should be unemployed in a economy because with these people being unemployed we have a better steady inflation rate

Question 28

What are the economic consequences of high unemployment?

Answer 28

lower demand of goods and services
Underutilization of the nation’s resources
Skilled workers may leave the country
Higher trade barriers
Increased budget deficit
Tax revenue is reduced
Lower GDP
Businesses make cutbacks

Question 29

Fiscal Policy

Answer 29

addresses taxation and government spending, and it is generally determined by government legislation.

Question 30

Monetary Policies

Answer 30

addresses interest rates and the supply of money in circulation, and it is generally managed by a central bank.

Question 31

Contractionary Fiscal Policy

Answer 31

Increase in taxes and Decrease in Government Spending

Question 32

Expansionary Fiscal Policy

Answer 32

Reduction of Taxes and Increase Government Spending