Unit 11 Q Bank

Increasing cost of goods and services and high unemployment are characteristics of A) stagflation. B) deflation. C) inflation. D) stagnation.

A) stagflation.

Which of the following can encourage economic growth because gradually increasing prices tend to stimulate business investment? A) Stagnation B) Mild inflation C) Deflation D) High inflation

B) Mild inflation

Deflation occurs during A) a depression, coinciding with economic expansion in the business cycle. B) a recession, coinciding with an economic contraction. C) a depression, coinciding with an economic trough in the business cycle. D) a recession, coinciding with economic peaks.

B) a recession, coinciding with an economic contraction.

The U.S. gross domestic product is best described as A) all services produced in the nation only. B) all goods and services produced within the nation. C) all goods and services produced domestically but sold overseas. D) all goods produced in the nation minus the value of all services produced.

B) all goods and services produced within the nation.

All the following are coincident indicators except A) trade sales. B) changes in durable goods inventories. C) retail employment. D) personal income.

B) changes in durable goods inventories.

A measure of a nation's citizen's economic activity is A) S&P 500 Index. B) gross national product. C) gross domestic product. D) Consumer Price Index.

B) gross national product.

All the following are lagging indicators except A) corporate profits. B) personal income. C) labor cost per unit of output. D) outstanding commercial loans.

B) personal income. Personal income is a coincident indicator. Corporate profits, labor cost per unit of output, and outstanding commercial loans are lagging indicators.

All the following are leading indicators except A) new orders. B) personal income. C) stock prices. D) the money supply.

B) personal income. The money supply, new orders, and stock prices are all leading indicators. These increase in advance to an increase in economic activity. Personal income, however, is a coincident indicator moving along with economic activity.

Economic growth has slowed to a halt with little consumer demand, but prices for goods and services are still rising. This is known as economic A) stagnation. B) stagflation. C) contraction. D) deflation.

B) stagflation.

Several months of slow economic growth and rising unemployment have characterized the economy. Market analysts would describe this as a period of A) stagflation. B) stagnation. C) inflation. D) deflation.

B) stagnation.

The consumer price index is a measure of A) the change in economic output. B) the change in prices. C) the change in the value of equities. D) the change in bond yields.

B) the change in prices.

Which of the following is a coincident indicator? A) Housing starts B) S&P 500 Index C) Household income D) Increase in the duration of unemployment

C) Household income

Which of the following is a leading indicator? A) Wages B) Gross domestic product C) New orders for consumer goods D) Corporate profits

C) New orders for consumer goods

Which of the following is a leading indicator? A) Gross domestic product B) Corporate profits C) New orders for consumer goods D) Wages

C) New orders for consumer goods New orders for consumer goods is a leading indicator, foretelling future economic activity (the actual purchase of those goods). Wages and gross domestic product are coincident indicators. Corporate profits are lagging indicators.

Stagnation in the economy can be associated with A) plentiful employment opportunities. B) prolonged periods of healthy economic growth. C) high unemployment. D) robust production.

C) high unemployment.

Which of the following is a coincident indicator? A) Housing starts B) S&P 500 Index C) Increase in the duration of unemployment D) Household income

D) Household income

Which of the following is a lagging indicator? A) Raw materials orders B) Increase in hours worked C) Decrease in industrial production D) Increase in the consumer loans to personal income ratio

D) Increase in the consumer loans to personal income ratio Changes in the ratio of consumer installment credit to personal income is a lagging indicator. Changes in industrial production and hours worked are coincident indicators. Changes in raw materials orders is a leading indicator.

A measure of a nation's citizen's economic activity is A) Consumer Price Index. B) gross domestic product. C) S&P 500 Index. D) gross national product.

D) gross national product.

Economic reports show that there is a general rise in prices for consumer goods and a high unemployment rate occurring simultaneously. This combination can best be described as A) deflation. B) stagnation. C) inflation. D) stagflation.

D) stagflation.

Several months of slow economic growth and rising unemployment have characterized the economy. Market analysts would describe this as a period of A) inflation. B) stagflation. C) deflation. D) stagnation.

D) stagnation.