Vocab unit 3

Question 1

A tool used to measure inflation that is made up of a market basket of goods purchased by the typical urban family.

Answer 1

consumer price index

Question 2

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

Answer 2

GDP

Question 3

Goods and services that are used in the production of another good or service.

Answer 3

intermediate products

Question 4

The dollar value of all final goods and services produced in a country’s borders in a given year that has been adjusted for inflation.

Answer 4

real GDP

Question 5

The dollar value of all final goods and services produced anywhere in the world by a country in a given year.

Answer 5

GNP

Question 6

The amount of exports minus the amount of imports.

Answer 6

net exports of goods and services

Question 7

The idea that the economy goes through regular periods of expansion and contraction.

Answer 7

business cycle

Question 8

A fall in a country’s GDP for a period of at least two quarters (6 months)

Answer 8

recession

Question 9

The portion of a business cycle in which GDP has stopped rising and is about to start declining.

Answer 9

peak

Question 10

The portion of a business cycle in which GDP has stopped declining and is about to start rising.

Answer 10

trough

Question 11

The portion of a business cycle in which GDP is rising.

Answer 11

expansion

Question 12

A dramatic decline in a country’s GDP in a short period of time or a slower decline that lasts for an extended amount of time.

Answer 12

depression

Question 13

A general decrease in the purchasing power of a currency. Alternately, can be expressed as a general increase in the prices of goods.

Answer 13

inflation

Question 14

A general increase in the purchasing power of a currency. Alternately, can be expressed as a general decrease in the prices of goods.

Answer 14

deflation

Question 15

The average price of a statistically significant subset of all the goods and services in an economy.

Answer 15

price index

Question 16

The central banking system of the United States.

Answer 16

federal reserve system

Question 17

Inflation that is out of control and rising rapidly.

Answer 17

hyperinflation

Question 18

A combination of rising inflation and a decrease in Gross Domestic Product.

Answer 18

stagflation

Question 19

The total amount of all people in an economy who want to have a job.

Answer 19

labor force

Question 20

Unemployment that occurs because workers choose to change their status and make themselves unemployed.

Answer 20

frictional unemployment

Question 21

Unemployment that occurs because changes in the economy have caused your skills to no longer match the needs of the market.

Answer 21

structural unemployment

Question 22

Unemployment that occurs because of downturns in the business cycle.

Answer 22

cyclical unemployment

Question 23

Unemployment that occurs because certain jobs are not available during some portion of the year.

Answer 23

seasonal unemployment

Question 24

A bank that belongs to the Federal Reserve System.

Answer 24

member bank

Question 25

The amount of interest earned by banks on any money that they deposit at the Federal Reserve.

Answer 25

interest on reserve balances

Question 26

the way in which the Federal Reserve adjusts and oversees the economy.

Answer 26

monetary policy

Question 27

The percentage of the amount borrowed that you will be charged for taking out a loan.

Answer 27

interest rate

Question 28

The amount of interest charged when banks borrow money from the Federal Reserve.

Answer 28

discount rate

Question 29

The amount of interest charged by banks to their best customers.

Answer 29

prime rate