Econ unit 5
Why aren't used goods calculated in the GDP
Used goods are not as popular as new goods
Which of the following would be the most likely to cause cost-push inflation
an increase in world oil prices
What is the Consumer Price Index
an index that shows changes in the cost of living over time
What kind of unemployment can be lessened when the government pursues policies that reduce the depth and length of contractions and prolong the periods of economic expansion
cyclical
During a war, the government puts pressure on producers for heavy equipment, supplies, and services, making each more valuable. What theory about inflation does this condition represent
demand-pull
The four parts of a business cycle graph are
expansion, peak, contraction, and trough
Deflation causes what to happen to the value of money to
fall
If the Fed raises the discount rate, the money supply will
fall
The largest component of GDP is
household consumption
An economy is experiencing low rates of unemployment with high inflation. An appropriate mix of government policies might be to
increase taxes and decrease government spending
Which of the following would occur during the contraction phase of the business cycle
increasing unemployment and declining GDP
Which of these are not one of the ways the Fed changes the money supply
printing more money
A tax in which tax rates rise with increasing income is known as a
progressive tax
Ten years ago, a house sold for $54,000. Today the same house is valued at $108,000. What has inflation done to consumers' purchasing power?
reduced it
A sales tax is an example of a
regressive tax
The amount of reserves a bank must hold against its checking accounts deposits as mandated by the fed is known as
required reserves
If the Fed lowers the reserve requirement, the money supply will
rise
Sometimes the government deficit spend to increase overall demand. Generally the federal government finances a budget deficit by
selling bills, notes, and bonds
Which one of these people lost his or her job because of structural unemployment
sonya (dropped out of school and fails to meet the requirements for her job)
Fiscal policy deals with taxes and government
spending
The discount rate is the interest rate at which
the Federal Reserve lends to commercial banks
If you lived on a fixed income, how would you be affected by inflation
you would be financially stressed because your income does not increase when prices go up
When the economy is working properly, what is the acceptable rate of growth of the GDP
3 to 5 percent
When the economy is working properly, what is acceptable rate of inflation
3.4 percent
When the economy is working properly, what is the acceptional unemployment rate
4 to 6 percent
Which of the following would cause the unemployment rate to increase
1. A woman who has not looked for a job in two years and begins looking again 2. A woman who quits her job and begins looking for a new job in another city
Which of the following would lead to a decrease in aggregate demand
An increase in personal income taxes
What is the formula for calculating GDP
C + I + G + NX
Which one of these people lost his or her job because of cyclical unemployment
Eva (lost her job at a major interior design firm during the recession in the 1980's)
Which of the following scenarios is the best example fo the multiplier effect
Income tax rates decrease decrease and Greg's take-home pay increases, so he buys himself a new TV
One negative aspect of a period of economic expansion is
Inflation rising above the creeping rate
Which one of these people lost his or her job because of frictional unemployment
Jordan (graduated from law school and is interviewing with various law firms)
Why would an economist use real GDP rather nominal GDP to measure growth
Real GDP reflects output more accurately than nominal GDP by using constant prices
When tax revenues exceed expenditures, the government has a ________, and when expenditures exceed tax revenues, the government has a ______________.
Surplus; deficit
According to the principle of cyclical unemployment, what will occur when the demand for goods and services drops during a recession
The demand for labor drops
Which of the following scenarios is the best example of expansionary fiscal policy
The government increases law enforcement funding and hires several more police officers
The Gross Domestic Product is
The market value of all final goods and services produced by a country inside it's boudaries in a specified period of time
which of the following is a tight-money policy
The selling of securities by the Federal Reserve
Which one of these people lost his or her job because of seasonal unemployment
Thomas (Job as a landscaper is on hold until the spring)