Study Guide

Question 1

Buying a new home is an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 1

Investment

Question 2

South Korea buys 10 Ford Explorers from a dealership in Georgia is an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 2

Net exports

Question 3

Illegal drugs are an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 3

Not part of GDP

Question 4

$1 million spent on insect research by the state of Florida is an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 4

Government spending

Question 5

You buy a homecoming dress from JC Penny’s off the clearance rack is an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 5

Consumption

Question 6

Buying a used car off a sale as in the newspaper is an example of (investment, consumption, net exports, government spending, or not part of GDP)

Answer 6

Not part of GDP

Question 7

8% of Americans are out of a job due to a current recession
(Frictional unemployment, structural unemployment, cyclical unemployment, or not unemployed)

Answer 7

Cyclical unemployment

Question 8

Jimmy quit his job to take care of his sick mother and father
(Frictional unemployment, structural unemployment, cyclical unemployment, or not unemployed)

Answer 8

Frictional unemployment

Question 9

A person with a chemistry degree is working at Domino’s
(Frictional unemployment, structural unemployment, cyclical unemployment, or not unemployed)

Answer 9

Not unemployed

Question 10

In the 1970’s many Americans lost their auto manufacturing jobs to Asia (Frictional unemployment, structural unemployment, cyclical unemployment, or not unemployed)

Answer 10

Structural unemployment

Question 11

Your favorite teacher gets married and has to look for a new job in Maine (Frictional unemployment, structural unemployment, cyclical unemployment, or not unemployed)

Answer 11

Frictional unemployment

Question 12

Does INFLATION increase or decrease the value of money?

Answer 12

Decrease

Question 13

Does DEFLATION increase or decrease the value of money?

Answer 13

Increases

Question 14

In GDP which sector is the largest dollar amount? (Investment, government spending? Consumption, or net exports)

Answer 14

Consumption

Question 15

Which of the following is the best measure of the production/output of an economy (GDP, CPI, Prime rate, or unemployment rate)

Answer 15

GDP

Question 16

What problem might policy makers be trying to address MOST if they increase funding for training programs covering skills such as computer repair; programming, and networking? (Frictional, structural, cyclical, or seasonal unemployment)

Answer 16

Structural unemployment

Question 17

When the actual inflation rate is greater than the anticipated inflation rate, who is most likely to suffer?

Answer 17

Those who lend at a fixed interest rate

Question 18

What transaction would represent an addition to a nations current gross domestic product?

Answer 18

The government increasing its domestic purchases of food for the military

Question 19

What is a good example of a final good or service

Answer 19

A cake purchased from a bakery for a wedding

Question 20

In a typical business cycle what stage immediately follows a peak?

Answer 20

Contraction

Question 21

Concern about an international crisis has caused consumers to save their money and postpone big purchases and investments. What is the effect on aggregate demand?

Answer 21

Aggregate demand will decrease

Question 22

When the price level falls, consumers and firms buy more goods and services. This relationship is represented by the

Answer 22

Aggregate demand curve

Question 23

How do fears for future economic problems affect GDP?

Answer 23

Consumers and businesses will spend less and save money for a future economic contraction; GDP will decrease

Question 24

The largest sector of the macroeconomy is (foreign, investment, government, or consumer)

Answer 24

Consumer

Question 25

Economic growth benefits the government by

Answer 25

Enlarging the tax base

Question 26

The benefits of long term economic growth doesn’t include

Answer 26

An increase in the availability of land

Question 27

What will a price ceiling set by the government create? (Surplus or shortsge)

Answer 27

Shortage

Question 28

___ ___ ___ - An index of the average level of prices for all goods and services in the economy

Answer 28

Consumer Price Index

Question 29

What will a price floor set by the government create? (Surplus or shortage)

Answer 29

Surplus

Question 30

Which of these is most likely to lead to inflation

Answer 30

An increase in the costs of production

Question 31

Over a two year period the nation of Parthia experiences a steep decline in unemployment rate, a rise in real GDP, and a stabilized price level. Parthia appears to be

Answer 31

In the middle of a boom period

Question 32

Which of the following results when federal government expenditures are less than the federal governments total receipts?

Answer 32

A federal budget surplus