Econ unit 5

Why aren't used goods calculated in the GDP

Used goods are not as popular as new goods

Which of the following would be the most likely to cause cost-push inflation

an increase in world oil prices

What is the Consumer Price Index

an index that shows changes in the cost of living over time

What kind of unemployment can be lessened when the government pursues policies that reduce the depth and length of contractions and prolong the periods of economic expansion

cyclical

During a war, the government puts pressure on producers for heavy equipment, supplies, and services, making each more valuable. What theory about inflation does this condition represent

demand-pull

The four parts of a business cycle graph are

expansion, peak, contraction, and trough

Deflation causes what to happen to the value of money to

fall

If the Fed raises the discount rate, the money supply will

fall

The largest component of GDP is

household consumption

An economy is experiencing low rates of unemployment with high inflation. An appropriate mix of government policies might be to

increase taxes and decrease government spending

Which of the following would occur during the contraction phase of the business cycle

increasing unemployment and declining GDP

Which of these are not one of the ways the Fed changes the money supply

printing more money

A tax in which tax rates rise with increasing income is known as a

progressive tax

Ten years ago, a house sold for $54,000. Today the same house is valued at $108,000. What has inflation done to consumers' purchasing power?

reduced it

A sales tax is an example of a

regressive tax

The amount of reserves a bank must hold against its checking accounts deposits as mandated by the fed is known as

required reserves

If the Fed lowers the reserve requirement, the money supply will

rise

Sometimes the government deficit spend to increase overall demand. Generally the federal government finances a budget deficit by

selling bills, notes, and bonds

Which one of these people lost his or her job because of structural unemployment

sonya (dropped out of school and fails to meet the requirements for her job)

Fiscal policy deals with taxes and government

spending

The discount rate is the interest rate at which

the Federal Reserve lends to commercial banks

If you lived on a fixed income, how would you be affected by inflation

you would be financially stressed because your income does not increase when prices go up

When the economy is working properly, what is the acceptable rate of growth of the GDP

3 to 5 percent

When the economy is working properly, what is acceptable rate of inflation

3.4 percent

When the economy is working properly, what is the acceptional unemployment rate

4 to 6 percent

Which of the following would cause the unemployment rate to increase

1. A woman who has not looked for a job in two years and begins looking again 2. A woman who quits her job and begins looking for a new job in another city

Which of the following would lead to a decrease in aggregate demand

An increase in personal income taxes

What is the formula for calculating GDP

C + I + G + NX

Which one of these people lost his or her job because of cyclical unemployment

Eva (lost her job at a major interior design firm during the recession in the 1980's)

Which of the following scenarios is the best example fo the multiplier effect

Income tax rates decrease decrease and Greg's take-home pay increases, so he buys himself a new TV

One negative aspect of a period of economic expansion is

Inflation rising above the creeping rate

Which one of these people lost his or her job because of frictional unemployment

Jordan (graduated from law school and is interviewing with various law firms)

Why would an economist use real GDP rather nominal GDP to measure growth

Real GDP reflects output more accurately than nominal GDP by using constant prices

When tax revenues exceed expenditures, the government has a ________, and when expenditures exceed tax revenues, the government has a ______________.

Surplus; deficit

According to the principle of cyclical unemployment, what will occur when the demand for goods and services drops during a recession

The demand for labor drops

Which of the following scenarios is the best example of expansionary fiscal policy

The government increases law enforcement funding and hires several more police officers

The Gross Domestic Product is

The market value of all final goods and services produced by a country inside it's boudaries in a specified period of time

which of the following is a tight-money policy

The selling of securities by the Federal Reserve

Which one of these people lost his or her job because of seasonal unemployment

Thomas (Job as a landscaper is on hold until the spring)