GDP Test

Question 1

Durable Good

Answer 1

• Can be used repeatedly

Question 2

Non-Durable Goods

Answer 2

Gets used up

Question 3

Capital Deepening

Answer 3

Firms increase physical capital by purchasing more equipment. Firms and employees increase human capital through additional training and education

Question 4

Real GDP

Answer 4

Accounts for inflation

Question 5

Nominate GDP

Answer 5

Counting GDP

Question 6

Intermediate Good

Answer 6

“Ingredients”

- Do not count towards GDP

Question 7

Final Good

Answer 7

Any good or service that is sold and consumed as is

Question 8

Four phases of GDP

Answer 8

1) Expansion: GDP increases over time
2) Peak: GDP stops increasing
3) Contraction: GDP decreases over time
4) Trough: GDP stops decreasing

Question 9

Consumer Price Index

Answer 9

Tracks changes in the price of the market basket

Question 10

Market Basket

Answer 10

Representative sample of goods and services

Question 11

Full Employment

Answer 11

No cyclical unemployment (there are enough jobs)

- unemployment rate is 2-4%

Question 12

Four types of unemployment

Answer 12

1) Frictional Unemployment: qualified, jobs exist, but workers haven’t found them yet
2) Seasonal Unemployment
3) Structural Unemployment: Skills of the unemployed don’t match job openings
4) Cyclical Unemployment: Caused by a contraction

Question 13

Inflation

Answer 13

A general increase in price level

Decrease in purchasing power

Question 14

Gross Domestic Product (GDP)

Answer 14

The dollar value of all final goods and services produced in a country’s borders in a given year

Question 15

Leading Indicators

Answer 15

Economic variables used to predict changes in the business cycle

Question 16

Lagging Indicators

Answer 16

Change after GDP unemployment

Question 17

Unemployment Rate

Answer 17

Percentage of the labor force that is unemployed

Question 18

Underemployed

Answer 18

Part of the labor force, but no job

Question 19

Recession

Answer 19

GDP decreases for 6 months

Question 20

Depression

Answer 20

Especially long or severe recession

Question 21

Purchasing power

Answer 21

Value of a currency expressed in terms of the amount of goods or services that one unit of money can buy

Question 22

Aggregate Supply

Answer 22

Supply of all goods and services in an economy

Question 23

Aggregate Demand

Answer 23

Demand for all goods and services in an economy

Question 24

Poverty Threshold

Answer 24

Minimum income to support your family

Question 25

Poverty Rate

Answer 25

Percentage of people below the poverty Threshold

Question 26

Per Capita GDP

Answer 26

GDP per person (GDP Population)

Question 27

Real Per Capita GDP

Answer 27

Accounts for population and inflation

Question 28

Business Cycle

Answer 28

A period of macro economic expansion followed by contraction

Question 29

Labor Force

Answer 29

All people working or actively seeking work

Question 30

Discouraged Workers

Answer 30

Given up looking for work (not unemployed)