Econ Unit 5 Review – Flashcards
Unlock all answers in this set
Unlock answersquestion
The main economic variables that affect business cycles include all of the following EXCEPT
answer
personal savings levels.
question
When plotted on a Lorenz Curve, the income distribution curve for the town of Lakeview is a straight line from 0 to 100%. This means that
answer
Everyone in Lakeview earns about the same income.
question
In a typical business cycle, what stage immediately follows a peak?
answer
contraction
question
As you move from left to right, the aggregate demand curve
answer
slopes downward.
question
According to the cost-push theory, what is responsible for inflation?
answer
Producers raise prices to meet increased costs.
question
The amount of money a person has left of his or her income after taxes is called
answer
disposable personal income.
question
Which of the following is an example of a final good or service?
answer
A cake purchased from a bakery for a wedding
question
Which of the following families is statistically the most likely to live below the poverty threshold?
answer
a black family headed by a single mother living in the inner city
question
An example of a nondurable good is
answer
a paperback book.
question
An accurate statement about the Great Depression would be that
answer
it was the most severe economic downturn in the history of industrial capitalism.
question
Which of the following is a result of unemployment that is very low?
answer
Companies have difficulties recruiting workers.
question
How has the distribution of income in the United States changed over the last 20 years?
answer
It has become less equal.
question
What is the difference between a recession and a depression?
answer
A depression is a particularly deep recession with high levels of unemployment.
question
What does it mean when a person is underemployed?
answer
The person has a job but they are overqualified for it.
question
What is a major problem for businesses during a period of chronic inflation?
answer
They cannot anticipate their costs.
question
Which of the following is most likely to be worried about high inflation?
answer
a retired couple on a fixed income
question
Which of the following is correct? The unemployment rate is
answer
(labor force - employed)/ labor force ´ 100.
question
According to the demand-pull theory, what is responsible for inflation?
answer
Demand for goods and services exceeds existing supply.
question
A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of
answer
structural unemployment.
question
If Bob loses his job at the GM plant because car manufacturing is slow due to a downturn in the economy, you can conclude that he is
answer
cyclically unemployed.
question
How do fears of future economic problems affect GDP?
answer
consumers will spend less and save money in case future economic problems affect them; GDP will be reduced
question
If the number of people employed is 150,000 and the labor force is 160,000, the unemployment rate is
answer
6.25%
question
All of the following actions promote capital deepening EXCEPT
answer
saving less and spending more of one's disposable income.
question
Compared with the income approach to calculating GDP, the expenditure approach is
answer
more practical.
question
How is nominal GDP converted into real GDP?
answer
through eliminating the effects of price increases on GDP growth
question
If no foreign companies produce in a country, but many of the country's companies build products in foreign countries, then it is safe to say that
answer
The country's GNP is greater than its GDP.
question
In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the
answer
aggregate demand curve.
question
When the economy is working properly, what is the unemployment rate?
answer
4 to 6 percent
question
An example of a durable good would be
answer
a used car.
question
Economists look to which of the following explanations for inflation?
answer
all of the above
question
All of the following measures help to promote technological progress EXCEPT
answer
increased wages for researchers.
question
An economy that experiences decreasing real GDP and increasing prices is said to suffer from
answer
stagflation.
question
What is workfare?
answer
a program that requires work in exchange for assistance
question
An example of capital deepening would be
answer
paying for an employee to take college courses.
question
What is the difference between seasonal unemployment and structural unemployment?
answer
Seasonal unemployment occurs because of schedules, whereas structural occurs because people lack skills.
question
Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?
answer
aggregate supply will decrease, raising the price level and lowering real GDP
question
The agency that maintains the National Income and Product Accounts (NIPA) is
answer
the U.S. Department of Commerce.
question
Which of the following would be counted in this year's GDP?
answer
The bonus check a worker receives this year
question
What is the possible consequence of the following scenario? Because of high unemployment rates in the country of Lavernia, employers offer higher wages. To meet their higher payroll costs and maintain profits, they charge consumers more for goods and services.
answer
a wage-price spiral of ever-increasing prices
question
Higher saving leads to higher GDP in the future because
answer
more capital is available for investment, leading to higher output through capital deepening.
question
Products that would be used in calculating GDP include
answer
The correct answer is: cars manufactured in Tennessee at a factory owned by a Japanese automobile company.
question
If the CPI for 2001 was 177 and the CPI for 2002 was 180, the rate of inflation between 2001 and 2002 was
answer
1.69%.
question
How does the Bureau of Labor Statistics determine how the market basket should change over time?
answer
by conducting a Consumer Expenditure Survey
question
Compared with the expenditure approach to calculating GDP, the income approach is
answer
more accurate.
question
What do most economists believe about the future of business cycles?
answer
The correct answer is: Business cycles will continue to drive our economy in the future, but the Federal Reserve may be able to better cushion the economy from the worst extremes.
question
Which of the following people is most likely to be classified as "working poor"?
answer
Carol, a single mother who works 35 hours a week at a job that pays slightly above minimum wage
question
If Jackson is paid an interest rate of 10% on his savings, but the inflation rate has risen to 20%, the purchasing power of his savings is
answer
decreased by 10%.
question
What is an example of a positive external shock to aggregate supply?
answer
Good weather leads to an unusually productive harvest for corn farmers.
question
The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following?
answer
typical goods and services for an urban household
question
Which of the following might cause the inflation rate to spike up sharply?
answer
Prices on world oil markets rise steeply due to war in the Middle East.
question
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is
answer
frictionally unemployed.