chapter 3 questions

Describe the four types of economic shifts the United States has experienced.

Agriculture, industry, services, and information

Describe what is shown by GDP, unemployment rate, rate of inflation, and national debt.

All of these measure the economic activity. GDP measures how many goods and services are produced, unemployment rate measures the number of people who are able to work and willing to do so, but can't find work, rate of inflation measures the strength of the economy, and national debt measures how much money the government owes.

Explain why the standard of living is higher in the United States than in many other countries.

Because of its productive workforce.

Why are people who are unemployed but not looking for work not included in the unemployment figures?

Because they are not willing nor looking for work, therefore they can't be apart of the unemployment figures.

Explain how individuals and the government influences the economy.

Individuals have an influence on the economy, because they are the main source of goods and services. The government has an influence on the economy, because they control the taxes in an economy.

Suppose you go to a store to buy a soda but notice the price is 20 cents higher than it was last week. Other prices are unchanged. Is this an example of inflation? Why or why not?

No, this is not an example of inflation, because only one product's price increased, not all of the products.

In which stage or stages of the business cycle would there be more personal bankruptcies? More business formations?

Recession and depression would have the most personal bankruptcies, because that's when the economic activity is at its lowest, people lose their jobs, businesses no longer have customers, which results in bankruptcies.

Why is inflation especially difficult for retired people?

Since they no longer have a job, they can't make money to account for the increase in the price of the goods and services.

Describe the four stages of the business cycle.

The four stages of the business cycle are prosperity, recession, depression, and recovery. Prosperity is a peak of economic activity, recession is when economic activity slows down, depression is a deep recession that affects the entire economy and lasts for several years, and recovery is a rise in business activity after a recession or depression.

Why might deflation be a bad thing?

When an economy produces more goods than the demand calls for, the sellers have to lower their prices and stop producing their product. Therefore, people have less money to buy goods, causing the demand to decrease even more.

Which would be included in GDP: babysitting at home or working at a day-care center?

Working at a day-care center because it's an actual business.

Would the cars made in this country by a foreign-owned company be included in GDP? Why or why not?

Yes, because the product is still being sold by this country in this country.