Module 5

If the unemployment rate in a particular month was 10% and the number of unemployed people was 8 million and the number of employed people was 72 million, then there were _____ people in the labor force.

80 million

Max was laid off from his job because there was a recession. What type of unemployment did Max experience?

Cyclical unemployment

Suppose a country had 5% last year and 2% inflation this year. The country is experiencing which of the following?

Disinflation

The countries of Sigma and Kappa both have a GDP of $25 billion. The population of Sigma is 1 million. The population of Kappa is 2 million. Which country has a higher standard of living?

Sigma

true or false: Inflation can cause people's living standards to decline if their wages and salaries do not rise by a similar amount.

True

Unemployment typically _______ during an expansion.

falls

True or false: A business cycle is a type of recession.

False

True or false: Nominal GDP is real GDP adjusted for inflation.

False

Suppose an island nation produces only two goods: palm oil and coconuts. In one year, the island produced 20,000 bottles of palm oil at a price of $6 each and 50,000 coconuts at a price of $3 each. What is the island nation's GDP?

$270,000

Since 1950, the growth rate of the U.S. economy, as measured by real GDP, has averaged about ______.

3.0 percent

In January 2019, the civilian population was 258.2 million and there were 163.2 million workers in the labor force. Of them, 6.5 million were unemployed. What was the unemployment rate in January 2019?

4.0%

Changing the __________ of commercial banks is a monetary policy action that the Federal Reserve can use to control the economy.

Reserve Requirements

frictional unemployment

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation. (printing money)

Which of the following was a cause of the German hyperinflation that occurred after World War I?

An increase in the money supply.

What is the most commonly used measure of price-level change?

Consumer Price Index

A period when economic output decreases is known as a(n) ______

Contraction

Which of the following is a final good or service?

Flour sold to your grandmother to be used to bake a birthday cake.

Venezuela experienced __________ when the inflation rate rose to over 4,000% in 2017.

Hyperinflation

During an economic downturn which tool of monetary policy might the Federal Reserve use to strengthen the economy?

Increase the money supply circulating in the economy.

________ are the actions and communications of the Federal Reserve System that affect the money supply and influence interest rates and the availability of credit in the economy.

Monetary Policy

During an economic downturn how might the Federal Government choose to raise revenue to pay for additional government spending?

Raise corporate and individual income tax rates.

True or false: Productivity in the United States has increased, meaning it is able to produce more goods with the same or fewer workers; therefore America's standard of living has increased.

True

True or false: Structural unemployment occurs when the jobs that are available require skills that do not match the skills possessed by those seeking jobs.

True

True or false: Inflation contributes to the decline of purchasing power in the economy.

True

________ inflation makes it harder for consumers and businesses to make long-term decisions.

Unanticipated

Deflation

a decrease in the general level of prices

Final good or service

a good or service that is produced for its final user and not as a component of another good or service (food, clothes)

Stagflation

a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)

true or false: A general rule of thumb is that a country has experienced a recession if real GDP has declined for two consecutive quarters.

true

To maintain the current standard of living an economy must grow _______.

at least as fast as its population is growing

The business cycle:

can be defined as the expansion and contractions of the economy over time.

Inflation caused by an overall increase in the price of energy is _____ inflation.

cost push

Mary worked on the assembly line at a home appliances plant. When the economy took a turn for the worse, people weren't buying as many refrigerators and washers and dryers, and she was laid off. She is classified as _________.

cyclically unemployed

_______ is a time when the economy experiences a slowing of price increases and a reduction in the overall change in the rate of inflation.

disinflation

A man lost his job six months ago, and he stopped looking for work 2 months ago because he felt there were no jobs available in his line of work. He's now doing work around his house. The man is considered

either discouraged or employed

At what point of the Business Cycle would an economy be if companies are increasing production, jobs are available, and consumer spending is increasing?

expansion

true or false: During periods of deflation there is a decrease in the prices of goods and services.

true

true or false: A 15-year old high school student who is looking for an after-school job but hasn't found one yet would be counted as unemployed.

false

true or false: recessions and depressions are the same thing.

false

true or false: Full employment is achieved when all eligible people who want to work can find employment at current wage rates.

true

If the Real GDP of Duoland grew by 3 percent last year, and the population of Duoland grew by 1 percent, the standard of living in Duoland:

improved.

true or false: Long-run inflation is driven mostly by increases in the money supply.

true

A positive change in the CPI indicates which of the following?

inflation

A sustained increase in the average level of the prices for goods and services in an economy over time is best known as _______.

inflation

Consumers, individual savers, investors, and financial institutions care about the ___________ because it allows them to better plan for the future.

inflation rate

A utility company builds a wind farm that is counted as part of the current year's GDP. The wind farm would be counted as part of _______.

investment spending

true or false: One cost of high unemployment is that the economy cannot produce as many goods and services.

true

true or false: Promoting pure research such as the Apollo Missions that led to the first human walking on the moon is an example of fiscal policy.

true

_________ inflation occurs when the economy experiences a period when consumers fearing higher prices purchases goods and services at a rate greater than producers are able to supply. As supplies decrease, prices should increase.

not anticipated (wrong answer, cant figure out what the correct one is)

true or false: Recessions are declines in real GDP and employment.

true

true or false: Underemployed workers include part-time workers who want to be working full time.

true

A ______________ would be counted as NOT in the labor force.

retired volunteer worker

investment spending

spending on new productive physical capital, such as machinery and structures, and on changes in inventories

In measuring Gross Domestic Product, market value refers to

the price at which a good or service sells in the market place.

When real GDP growth is increasing, which of the following is most likely to decrease?

unemployment

structural unemployment

unemployment that occurs when workers' skills do not match the jobs that are available

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves (ex. recessions, lay offs)

True or false: A gadget produced in Mexico by an U.S. company is counted in GDP.

False

True or false: Fiscal and monetary policies can both be used to build and maintain a healthy, stable economy, but they cannot be used at the same time.

False

true or false: If the country of Duoland has a real GDP of $400,000 and the country of Unoland has a real GDP of $100,000, the standard of living must be higher in Duoland than in Unoland.

False (cannot be determined from information given)

true or false: Economic growth, low long-term interest rates and full employment are the three national economic goals.

false

true or false: Over the past one hundred years business cycles have become more severe.

false

true or false: The following equation is used to calculate the Inflation Rate. (Qty × Price) + (Qty × Price) / 100 = ?

false

true or false: Unanticipated inflation helps lenders and hurts borrowers, because the repaid money is worth less than expected so the lender earns more profit.

false

The unemployment rate has _______ over time.

fluctuated