Chapter 14 Review- Economics Test
can provide cash to low-income workers
Earned Income Tax Credits
Structural unemployment is usually temporary
False
Full employment is reached when the unemployment rate drops below 7 percent
False (5%)
The two phases of the business cycle are peaks and troughs
False (Expansion and Recession)
The worst downturn of the business cycle in the United States occurred the Cold War
False (The Great Depression)
The _______________ curve shows how much the actual distribution of income varies from an equal distribution of income
Lorenz
curve that shows how much the actual distribution of income varies from an equal distribution
Lorenz curve
All of the recessions between World War II and the 1980s took place fairly regularly
True
Business fluctuations are systematic increases and decreases in real GDP
True
Economic models are used to predict future economic activity
True
The unemployment rate does not take into account the number of part-time workers who want to have full-time jobs
True
The unemployment rate is calculated by dividing the number of unemployed persons by the total number of persons in the civilian labor force
True
The unemployment rate is determined by the Bureau of the Census
True
systematic ups and downs of the real GDP
business cycle
According to the demand- pull theory, inflation is caused by
consumers
An economist who attributes inflation to the increasing prices of producer inputs is holding to the _______________ theory of inflation
cost- push
During the late 1990s, the United States experienced___________________ inflation, at a rate of about 3 percent per year
creeping
inflation in the range of 1 to 3 percent per year
creeping inflation
Unemployment that is directly related to swings in the business cycle is
cyclical unemployment
Although __________________ is very rare, prices of goods did increase during the Great Depression
deflation
decrease in the general price level
deflation
If the economy reaches a state in which large numbers of people are out of work, there are shortages of consumer products, and manufacturing plants sit idle, it is clear that the economy is in a _____________________
depression
state of the economy characterized by high unemployment, acute shortages, and excess production capacity
depression
The equal distribution of income is cause by __________________ levels, wealth, discrimination, ability, and monopoly power
education
location where companies are free of certain local, state, and federal tax laws
enterprise zone
Many cities establish ___________________ to encourage businesses to locate in poorer sections of the region, so that jobs will become available to the working poor
enterprise zones
After the GDP bottoms out, the economy moves into a period of __________________, which is the second phase of the business cycle
expansion
The business cycle since World War II has been characterized by
extended expansions alternating with brief recessions
The government issues _________________ to ensure that people living in poverty receive enough food to eat
food stamps
If inflation reaches 100 to 300 percent, the economy is in a state of ____________________
galloping inflation
intense form of inflation that can go as high as 100 to 300 percent
galloping inflation
inflation in the range of 500 percent a year and above
hyperinflation
monthly statistical series that anticipates changes to the real GDP
index of leading indicators
The forty percent of the population with the lowest income controls
less than 2 percent of the nation's wealth
All of the following account for the growing income gap EXCEPT
lessening wage advantages for the well educated
proposed type of tax that would make cash payments to certain groups who live below the poverty line
negative income tax
point where real GDP stops going up
peak
annual dollar amounts used to determine whether people are living in poverty
poverty guidelines
turnaround point where real GDP stops going down
trough
During swings in the business cycle, _______________ may increase because certain industries will lay off workers until the business climate improves
unemployment
Ideally, the _________________ will remain under 5.0 percent, which indicates nearly full employment
unemployment rate
percent of people out of work divided by the total number of people in the civilian labor force
unemployment rate
The broad term for economic and social programs that provide regular assistance for people in need is _____________________
welfare
economic and social programs that provide regular assistance to the needy
welfare
The income gap has _________________ since the 1980s
widen/ grown
According to the cost-push theory, inflation is caused by
workers
Many states have set up ______________, programs that require people receiving welfare to provide labor in exchange for benefits
workfare
This is proposed market- based antipoverty program designed to encourage work and reduce administrative costs
workfare programs
When the GDP declines foe six months in a row, economists know the economy is in a _________________
recession
period during which real GDP declines for two quarters in a row or for six consecutive months
recession
unemployment resulting from changes in the weather or changes in the demand for certain products
seasonal unemployment
This marketed the beginning of the Great Depression in 1929
stock market crash
Changes in technology and changes in consumer tastes can cause
structural unemployment
caused by a fundamental change in the operations of the economy
structural unemployment
unemployment caused when machines replace people
technological unemployment
The Lorenz curve is used to demonstrate
the degree of income inequality