Economics Topic 7

Who does the government consider to be poor?

Families whose income level does not support their household.

What is one way that gross domestic product differs from gross national product?

GDP does not include income earned outside the U.S. by U.S. firms and citizens and GNP does.

GDP per capita will grow when

GDP rises faster than the population.

What set off the economic slump of the early 1980s?

high consumer interest rate

Which industries were especially hard hit following the terrorist attacks of September 11, 2001?

hotel and airline

How does inflation influence purchasing power?

it reduces it

Which of the following is most likely to lead to technological progress?

more scientific research

Why do many inner-city residents earn less than residents outside the inner city?

They lack transportation to higher wage jobs.

Why is the core inflation rate calculated separately from the inflation rate?

To better show long term effects on inflation.

Workfare?

a program that requires work in exchange for temporary help from the government

Which of the following usually results from high consumer confidence?

a rise in gross domestic product

Working at a job for which one is over-qualified, or working part-time when full-time work is desired is called

underemployment

In which of the following situations would having a trade deficit most likely benefit a nation?

when the imports are used for long-term investment

Identify a circumstance outside the economy that can cause unemployment.

A hurricane damages the Gulf Coast

Which person is most likely to be described as "working poor"?

Deb, a single mother who works part-time at minimum wage.

What is offshoring and why is it a cause of structural unemployment in the United States?

It is when companies relocate facilities to countries where costs are lower which means relocating jobs.

How does nominal GDP differ from real GDP?

Nominal GDP is based on current prices and real GDP is based on constant prices.

Why do economists calculate GDP by both the expenditure approach and the income approach?

The combined methods provide a more accurate measure of GDP

What is full employment?

all who are able to work are employed

Why are intermediate goods not included in GDP?

because including them means double counting

Which best describes a wage-price spiral?

cause-and-effect relationship between rising wages and rising prices, or inflation

The Earned Income Tax Credit program began as a response to

criticisms of government antipoverty programs

What are the parts of the business cycle?

peak, trough, and contraction

Which of the following would lead to capital deepening and economic growth?

productivity per worker increases

If aggregate demand increases, what happens to real GDP?

real GDP rises

If real GDP falls for two consecutive quarters, the economy is said to be in __________.

recession

Which of the following is a possible effect of inflation?

reduced value of savings

A person who manages a shoe store may be out of a job as more customers order shoes online instead of shopping in stores. The manager would then be an example of

structural unemployment

What is the largest source of capital available for businesses to invest?

the money that individuals save