Primavera Economy Unit 5 Workbooks and Checkpoints

How much did the United States earn in exports in 2015?

$2.3 trillion.

What is a desirable long-term growth rate of the GDP to show the economy is healthy while minimizing effects of inflation?

2 percent to 3 percent.

What are bank reserves?

A bank's holding of deposits and physical cash in the bank's vault.

What would be a government response to slow inflation?

A government could raise taxes to decrease the money in circluation.

What are some of the most common obstacles to developing country's economic growth? (Select all that apply.)

A lack of clean water and nutritious foods, Limited lending institutions that provide loans, Lack of educational opportunities for the populace.

What is the consumer price index (CPI)?

A measure of inflation.

What is included in the consumer price index (CPI)?

A sampling of goods across industries.

Which could cause rapid inflation?

A significant wage increase.

Read the sentence. When a nation has a(n) [blank] advantage, they can produce a good or service at a lower cost than another nation that has the same resources. Which best completes the sentence?

Absolute.

How does an increase of the retired (elderly) population impact the economy?

An increase in nonproducing citizens decreases per capita GDP.

What is a benefit of international trade?

An increase in the variety of goods.

What is the trade-weighted value of the dollar?

An index showing the measurement of the foreign exchange value of the US dollar in relation to foreign currencies commonly used in trade.

Which was most used by early US colonists to purchase and trade goods?

Barter system.

Read the sentence. According to its charter, the Federal Reserve Bank is governed by a(n) [blank] of governors. Which correctly completes the sentence?

Board.

How does an individual become a governor of a Federal Reserve branch?

By presidential appointment.

Read the sentences. When measuring GDP, it is important to note that businesses' goods flow to consumers, whose payments for those goods provide profits for those businesses. This process can be depicted as flowing in a _[blank]_ shape. Which accurately completes the sentence?

Circular.

Read the sentence. In the early 1800s, David Ricardo developed the theory of [blank] advantage, which describes how a nation may have lower opportunity costs than another nation. Which best completes the sentence?

Comparative.

Which entity regulates the Federal Reserve Bank by requiring board governors to testify about their work?

Congress.

Which accurately describes price indexes economists use to monitor prices and inflation?

Consumer price indexes economists use to measure prices and inflation include the consumer price index, the producer price index, and the GDP deflator.

What was the name of the money the Continental Congress authorized?

Continentals.

Which form of currency was authorized by the Continental Congress and eventually became worthless due to inflation?

Continentals.

Which is most likely to be implemented by the government to overcome structural unemployment?

Courses or programs to help workers develop new skills.

Which type of unemployment is caused by a contraction of the business cycle?

Cyclical.

What are major obstacles to economic development for developing countries? (Select all that apply.)

Debt to foreign banks, External debt to foreign banks.

What is true regarding economic growth? (Select all that apply.)

Economic growth creates jobs and in turn provides income, Economic growth raises per capita gross domestic product (GDP).

What does gross domestic product (GDP) measure?

Economic growth.

Read the sentence.One way that a strong economy affects _[blank]_ is that it makes business owners more prone to take risks. Which accurately completes the sentence?

Entrepreneurship.

What is a good or service sold to a foreign nation?

Export.

How does Congress hold the Federal Reserve accountable? (Select all that apply.)

Federal Reserve appointees provide testimony to congressional committees, The Federal Reserve is audited by the Government Accountability Office (GAO).

What is the formula for measuring GDP?

Final goods and services multiplied by the price.

When the world was on the gold standard, which system was used to determine the value of a country's currency as compared to another country's currency?

Fixed exchange rate.

Under which system do the forces of supply and demand establish the value of a country's currency as compared to another country's currency?

Flexible exchange rate.

Which describes frictional unemployment?

Floyd quits his job at the store to look for a better-paying job in manufacturing.

Read the sentence. One way that a weak economy can affect _[blank]_ is that it can make accepting and distributing goods more difficult, as well as intensify scarcity. Which accurately completes the sentence?

Foreign trade.

Read the sentence. To calculate [blank], the quantity of final goods and services are multiplied by the price. Which best completes the sentence?

Gross domestic product.

What is defined as a common indicator of an economy's health based on the total value of goods and services produced during a fiscal year?

Gross domestic product.

What is defined as the market value of all final goods and services produced in a country in a specific time frame?

Gross domestic production.

How does a change in population impact gross domestic product (GDP)?

If the population increases but production stays the same, per capita GDP will decrease.

How can the government combat structural unemployment?

Implement new training programs to help workers acquire new skills.

How has income inequality in the United States changed? (Select all that apply.)

Income inequality has increased partly due to the rise of single parents, Income inequality has increased partly due to the demand for skilled workers.

How does increasing life expectancy affect population size?

Increasing life expectancy decreases the death rate, which increases population size.

What are potential causes of a business cycle contraction? (Select all that apply.)

Interest rates are raised, making it more expensive to borrow money, Production is slowed to minimize excess inventory, War causes people to become reluctant to purchase goods.

Which international agency consists of 189 countries, promotes international monetary cooperation, and facilitates international trade?

International Monetary Fund.

Why is measuring economic performance important? (Select all that apply.)

It can help governments know how their spending could be affected, It can help businesses know how their ability to take risks with new products could be affected, It can help individuals know how their standard of living could be affected.

What is the purpose of the Office of Inspector General?

It conducts audits of the Federal Reserve to eliminate fraud and waste.

How is the Federal Reserve funded?

It earns interest from government securities.

How does the World Bank Group assist developing countries?

It offers loans to developing countries.

What does the consumer price index (CPI) measure?

It tracks increases in prices to measure inflation.

Why did Congress create the Federal Reserve?

It was created to provide economic stability and a remedy for uninsured investments.

Which antipoverty program offers medical insurance for low-income individuals and families?

Medicaid.

Read the sentence. The Federal Reserve Bank is responsible for entering [blank] into circulation. Which correctly completes the sentence?

Money.

Read the sentence. The Federal Reserve is considered to be the [blank] bank of the United States of America. Which correctly completes the sentence?

National.

Why might the economy slow during wartime? (Select all that apply.)

People might choose to save money instead of buy new products, An economy may need to divert resources to a war effort.

Which correctly explains the effects of population growth in developing countries?

Population growth is higher in less developed countries, creating greater demands on health care and education.

Read the sentence. The [blank] nominates chairmen and vice chairmen to the Federal Reserve. Which correctly completes the sentence?

President.

What are potential causes of a business cycle expansion? (Select all that apply.)

Production increases to meet new demands, Interest rates are lowered to encourage borrowing, A new industry is developed.

Read the sentence. The _[blank]_ approach adds up the value at each stage of production, where the value added is the total sales minus the value of intermediate inputs.Which accurately completes the sentence?

Production.

How is real GDP different from nominal GDP?

Real GDP is adjusted for inflation and often appears lower than normal GDP.

What is an economic indicator that calculates the total value of goods and services produced during a fiscal year that also factors in inflation?

Real gross domestic product.

Read the scenario.Joanne, a former account manager at a large corporation, recently lost her job. Although her family can still pay its bills and afford groceries, the family no longer has discretionary income for leisure activities, such as going to restaurants or movie theaters. They have much less money compared to their friends and neighbors. This is an example of _[blank]_. Which most accurately completes the sentence?

Relative poverty.

Which region of the world accounts for the most people living in extreme poverty?

Sub-Saharan Africa.

Which accurately describes how the Federal Reserve is funded?

The Federal Reserve earns interest from its ownership of government securities.

Why is the Federal Reserve managed by federal government oversight?

The Federal Reserve is responsible for stabilizing prices.

What are the duties and responsibilities of the Federal Reserve? (Select all that apply.)

The Federal Reserve stabilizes and safeguards the nation's economy, The Federal Reserve implements American monetary policy.

Read the sentence. The gross domestic product (GDP) shrunk by 2 percent over a 12-month period. What can you infer about the economy?

The GDP indicates an economic contraction.

How does Congress hold the Federal Reserve accountable? (Select all that apply.)

The Government Accountability Office (GAO) can audit the Federal Reserve's activities, Appointees of the Federal Reserve can appear before congressional committees to provide testimony.

Which is an example of absolute poverty?

The Smith family lives in an unsafe, decaying apartment with mold issues, and they oftentimes cannot afford food each day.

What is a benefit of international trade?

The diffusion of culture and ideas between nations.

Review the list. A rising unemployment rate. A decline in GDP. What does the list indicate about economic growth?

The economy is in a decline.

What is an argument for free trade?

The possibility of a trade freeze decreases.

What does a decline in gross domestic product (GDP) communicate to economists?

The total dollar value of all final goods and services within a 12-month period decreased.

How do improvements in technology impact economic growth in the long run?

They make production more efficient, which leads to growth.

What position did labor unions take on the free trade agreements passed in the 1990s?

They were opposed to them because they feared the loss of US jobs.

How can infant industries be harmed by open free trade?

They will not survive due to high production costs.

What were the results of the Smoot-Hawley Tariff passed by Congress in 1930?

Thousands of imported goods were taxes, resulting in a trade freeze between the United States and several countries.

Where are the Federal Reserve branches located?

Throughout the United States.

What is a goal of the North American Free Trade Argument?

To decrease trade barriers and tariffs.

What is the purpose of the North American Free Trade Agreement?

To increase trade between Mexico, the United States, and Canada.

Read the scenario. The United States engages in free trade with Holland. Last year, the United States decided to put a 75 percent tariff on imported tulips. Why would the United States impose that tariff?

To protect US tulip growers from competition.

Which accurately describes the barter system during the colonial era of the United States before a national currency evolved?

Tobacco and animal skins were common mediums of exchange.

What has happened when demand-pull causes inflation?

Too much money chased too few goods.

What are important arguments in favor of trade protection policies? (Select all that apply.)

Trade protection policies protect a country's security, Trade protection policies protect infant industries.

Which of Rostow's Five Stages of Economic Growth involves agricultural production and hunting and gathering?

Traditional society.

When does a country have a trade surplus?

When the cost of a country's exports exceeds the cost of its imports.

When does a country have a trade deficit?

When the cost of a country's imports exceed the value of its exports.

When would nominal GDP appear lower than real GDP?

When the rate of inflation is negative.

Which international agency would most likely be involved in funding the construction of a water pipeline in a developing country?

World Bank Group.

Read the statement. The exchange rate for converting US dollars to the British pound is .767. How much is $200 US worth in Great Britain?

£153.