Unit 4: Economic Final Exam Review

Question 1

GDP

Answer 1

The total value of all final goods and services produced within a country’s borders in a given year. Measures how big an economy is.

Question 2

Nominal GDP

Answer 2

Calculating GDP using prices that can change year-to-year.

Question 3

Real GDP

Answer 3

Calculating GDP using consistent, unchanging prices.

Question 4

Real GDP per capita

Answer 4

Real GDP is divided by the total population. The best measure of a nation’s standard of living.

Question 5

Phases of the Business Cycle

Answer 5

Expansion, Peak, Contraction, Trough.

Question 6

Causes of Economic Growth

Answer 6

Technology, Human Capital, DIvison of Labor and Specialization, Trade

Question 7

Inflation Goal

Answer 7

2% or less

Question 8

GDP Growth Goal

Answer 8

3%

Question 9

Unemployment

Answer 9

4-6%

Question 10

Unemployed

Answer 10

Working for less than one hour per week while being available and having made an effort to find a job.

Question 11

Frictional Unemployment

Answer 11

People voluntarily between jobs; waiting to start new ones.

Question 12

Structural/Technical Unemployment

Answer 12

Worker’s skills currently do not match the jobs available. Training required.

Question 13

Seasonal Unemployment

Answer 13

Caused by seasonal changes in the production schedules of various industries.

Question 14

Cyclical Unemployment

Answer 14

BAD! Due to a downturn of the business cycle, recessions causing layoffs.

Question 15

Full Employment

Answer 15

When the unemployment is between 4-6%. There are always some people between jobs.

Question 16

Inflation

Answer 16

The rise in general level of prices of goods and services.