6.06 Unit 7 Exam
Consider the scenario: The United States experiences a major economic downturn. During this downturn, a number of companies that manufacture information-related technologies face bankruptcy. Major labor unions, corporations, and private citizens are demanding that Congress take action to prevent even more job losses. During congressional debates, the concept of a higher tariff gains popularity amongst members of Congress. Before Congress passes a law raising tariffs, what lesson from history should be considered?
Any tariffs instituted by Congress will be answered by America's trading partners with tariffs of equal severity, causing rapid inflation in the price of consumer goods.
Which of the following organizations conducts economic research, maintains a list of leading economic indicators, and publishes monthly economic reports?
Conference Board
Businesses react to contractions in the economy by increasing output.
False
Cyclical unemployment occurs because a worker's skills do not match available jobs.
False
The cyclical approach is used to calculate Gross Domestic Product.
False
The demand-pull theory of inflation states that inflation can be caused when there is too much money in the economy
False
Unemployment rates nearest zero are desirable in the economy.
False
What often happens to stock prices when a recession in the economy is in the future?
Stock prices decrease.
As capital investment levels off, business spending decreases and leads to a possible contraction in the economy.
True
As the population of the U.S. continues to grow, the number of jobs must grow with it.
True
Real GDP is calculated using unchanging prices.
True
The cost of rising resources causing the cost of finished products to push upward is one cause of inflation.
True
Unemployment can force the economy into a contraction because consumers top purchasing high priced products.
True
Nominal GDP is calculated using ________________ prices.
current
Which goal of the U.S. economy is characterized by the maximum utilization of resources?
efficiency
What is the name given to unemployment that occurs because people want to take time to find a job?
frictional
Near-zero rates of unemployment are not desirable because they often lead to
increases in the cost of production.
Which of the following is NOT a factor that influences the business cycle?
missing Social Security payments
The highest point in the business cycle is the
peak.
Which goal of the U.S. economy is characterized by the government providing a safety net for those who have fallen on hard times or otherwise need help?
security
What is the lowest point of the business cycle called?
trough
