econ unit three
When government intervention makes currency worthless
hyperinflation
low inflation is a sign of a healthy economy because
it results from a steady rise in demand.
The consumer price index (CPI) is criticized for
overstating the true burden of inflation because it does not recognize consumers' ability to substitute goods and services as prices change
stagflation
persistent high inflation combined with high unemployment and stagnant demand in a country's economy.
recession is when
production is very high but demand is very low
The consumer price index (CPI) is designed to measure changes in the cost of a
select market basket of goods and services
The aim of the study of macroeconomics is to examine
the behavior of factors affecting the economy.
Which unemployment rate do most economists consider to be acceptable in the United States?
4-6 percent this is known as full employment.
GDP formula
C+I+G+Xn (private consumption + gross private investment + government investment + government spending + (exports - imports).)
Which of the following would cause the official unemployment rate to understate the problem of unemployment?
Discouraged workers, underemployed
GDP stands for
Gross Domestic Product
What best describes an economy at full employment?
Limitations of GDP
Which of the following situations will benefit lenders of fixed interest rate loans?
The actual inflation rate is less than the expected inflation rate.
Which of the following transactions would represent an addition to a nation's current gross domestic product?
The government increases its domestic purchases of food for use by the military.
Which federal agency calculates the Consumer Price Index (CPI)
US Bureau of Labor Statistics
Which of the following statements exemplifies the concept of structural unemployment?
Workers are fired because their skills are no longer in demand.
Economic growth takes place when
a country produces more goods and services
An increase in the gross domestic product (GDP) is a sign that
a country's economy is growing.
extended recession period is called
a depression
high inflation is a sign of
a struggling economy because wages cannot keep up with the increase in prices.
hyperinflation
an exponential increase in the price of goods and services
worst type of unemployment
cyclical and it goes with depressions
GDP measures
health of economy
Hyperinflation can occur when
the government prints a ton of money in order to pay off its debt.
frictional unemployment
the unemployment which exists in any economy due to people being in the process of moving from one job to another.
structural unemployment
unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.
cyclical unemployment
unemployment that rises during economic downturns and falls when the economy improves
