6.06 Unit 7 Exam

Consider the scenario: The United States experiences a major economic downturn. During this downturn, a number of companies that manufacture information-related technologies face bankruptcy. Major labor unions, corporations, and private citizens are demanding that Congress take action to prevent even more job losses. During congressional debates, the concept of a higher tariff gains popularity amongst members of Congress. Before Congress passes a law raising tariffs, what lesson from history should be considered?

Any tariffs instituted by Congress will be answered by America's trading partners with tariffs of equal severity, causing rapid inflation in the price of consumer goods.

Which of the following organizations conducts economic research, maintains a list of leading economic indicators, and publishes monthly economic reports?

Conference Board

Businesses react to contractions in the economy by increasing output.

False

Cyclical unemployment occurs because a worker's skills do not match available jobs.

False

The cyclical approach is used to calculate Gross Domestic Product.

False

The demand-pull theory of inflation states that inflation can be caused when there is too much money in the economy

False

Unemployment rates nearest zero are desirable in the economy.

False

What often happens to stock prices when a recession in the economy is in the future?

Stock prices decrease.

As capital investment levels off, business spending decreases and leads to a possible contraction in the economy.

True

As the population of the U.S. continues to grow, the number of jobs must grow with it.

True

Real GDP is calculated using unchanging prices.

True

The cost of rising resources causing the cost of finished products to push upward is one cause of inflation.

True

Unemployment can force the economy into a contraction because consumers top purchasing high priced products.

True

Nominal GDP is calculated using ________________ prices.

current

Which goal of the U.S. economy is characterized by the maximum utilization of resources?

efficiency

What is the name given to unemployment that occurs because people want to take time to find a job?

frictional

Near-zero rates of unemployment are not desirable because they often lead to

increases in the cost of production.

Which of the following is NOT a factor that influences the business cycle?

missing Social Security payments

The highest point in the business cycle is the

peak.

Which goal of the U.S. economy is characterized by the government providing a safety net for those who have fallen on hard times or otherwise need help?

security

What is the lowest point of the business cycle called?

trough