Unit 11 (Quiz 1)

A measure of a nation's citizen's economic activity is A) gross national product. B) S&P 500 Index. C) Consumer Price Index. D) gross domestic product.

A) gross national product.

Increasing cost of goods and services and high unemployment are characteristics of A) stagnation. B) deflation. C) stagflation. D) inflation.

C) stagflation. Stagflation is the rare occurrence where the economy is contracting and income is dropping but prices are still rising.

The economy is showing that employment is low, there is little consumer demand, and loans for expansion and retooling are way down, showing a lack of business activity. Yet prices for consumer goods are still rising. Economists would call this a period of A) stagnation. B) inflation. C) deflation. D) stagflation.

D) stagflation.

The U.S. gross domestic product is best described as A) all goods and services produced within the nation. B) all goods and services produced domestically but sold overseas. C) all goods produced in the nation minus the value of all services produced. D) all services produced in the nation only.

A) all goods and services produced within the nation.

Which of the following is a lagging indicator? A) Decrease in industrial production B) Increase in the consumer loans to personal income ratio C) Raw materials orders D) Increase in hours worked

B) Increase in the consumer loans to personal income ratio

All the following are lagging indicators except A) labor cost per unit of output. B) personal income. C) outstanding commercial loans. D) corporate profits.

B) personal income. Personal income is a coincident indicator. Corporate profits, labor cost per unit of output, and outstanding commercial loans are lagging indicators.

Economic reports show that there is a general rise in prices for consumer goods and a high unemployment rate occurring simultaneously. This combination can best be described as A) stagnation. B) stagflation. C) deflation. D) inflation.

B) stagflation.

The consumer price index is a measure of A) the change in bond yields. B) the change in prices. C) the change in economic output. D) the change in the value of equities.

B) the change in prices.

Deflation occurs during A) a depression, coinciding with economic expansion in the business cycle. B) a recession, coinciding with economic peaks. C) a recession, coinciding with an economic contraction. D) a depression, coinciding with an economic trough in the business cycle.

C) a recession, coinciding with an economic contraction. Deflationary periods in the economy are most associated with severe recessions. Recessions occur during periods of economic contraction in the business cycle.

Several months of slow economic growth and rising unemployment have characterized the economy. Market analysts would describe this as a period of A) inflation. B) deflation. C) stagnation. D) stagflation.

C) stagnation. Stagnation is defined as prolonged periods of slow or little economic growth accompanied by high unemployment.