Flashcards About Economics 1

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The recurrent ups and downs in the level of economic activity extending over several years are a description of a:
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Business Cycle
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In which industry or sector of the economy is output least likely to be affected by the business cycle:
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Agricultural Commodities
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The production of non durable good is more stable than the production of durable consumer goods over the business cycle.
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Which industry or sector of the economy would least likely be affected by the business cycle
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Services
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A peak in the business cycle:
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is a temporary maximum point
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A trough in the business cycle occurs when:
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employment and output reach their lowest levels
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A recession is defined as:
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A fall in real GDP that lasts six months or longer
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Which phase of the business cycle would be most closely associated with an economic contraction:
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Recession
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Which is the correct way to calculate the unemployment rate:
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[(Unemployed)/(Labor Force)] x 100
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Assuming the total population is 200 million, the labor force is 100 million , and 92 million workers are employed, the unemployment rate is:
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8 percent
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A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?
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6 percent
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The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is:
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9 million
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In calculating the unemployment rate, “discouraged” workers who are not actively seeking employment are:
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Included
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In calculating the unemployment rate, part-time workers are:
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Counted as employed because they are receiving payment for work
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Official unemployment rate statistics may:
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understate the amount of unemployment because of the presence of “discouraged” workers who are not actively seeking employment.
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A headline reads: “Steel industry suffers slump as import competition increase; unemployment rises.” This type of unemployment can best be characterized in economic terms as:
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structural
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The best example of a “frictionally unemployed” worker is one who:
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Is in the process of voluntary switching jobs
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A headline states: “Real GDP falls again as the economy slumps.” This condition is most likely to produce what type of unemployment:
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Cyclical
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The natural rate of unemployment:
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Is equal to the total of frictional and structural unemployment
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The GDP gap measures the amount by which:
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Potential GDP exceeds actual GDP
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If the GDP gap is negative then:
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Actual GDP is less than potential GDP
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Inflation is a:
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Sustained rise in the general level of prices
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If the Consumer Price Index was 166.6 in one year and 172.2 in the next year, then the rate of inflation from one year to the next was:
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3.4 percent
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If the Consumer Price Index was 115 one year and 120 the next year. The rate of inflation from when you to the next was approximately
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4.3 percent
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Which measures the changes in the price of a “market basket” of some 300 goods and services purchased by typical urban consumers:
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The Consumer Price Index
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In the annual inflation rate is 5% a year, about how many years will it take for the price level to double:
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14 years
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The price level has doubled in 35 years. The approximate annual percentage rate of increase in the price level over this period has been:
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2 percent
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In an economy, the price level has doubled in about 70 years. The approximate annual percentage rate of increase in the price level over this period has been.
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1 percent
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Inflation that occurs when total spending is greater than the economy’s ability to produce output at the existing price level is:
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Demand-pull inflation
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A statement that is often used to describe demand-pull inflation is
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“Too much money chasing too few goods”
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The aggregate demand curve is the relationship between the:
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Price level and the purchasing of real domestic output
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A decline in the quality of real output demanded along the aggregate demand curve is a result of a(n):
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Increase in the price level.
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An increase in the personal income tax-rates will cause a:
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Decrease in the aggregate demand.
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An increase in government spending will cause an:
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Increase in aggregate demand.
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When national income in other nations increases:
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Aggregate demand increases.
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If the dollar depreciates in value relative to foreign currencies, aggregate:
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Demand increases.
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Which combination of factors would most likely increase aggregate demand:
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An increase in consumer wealth and a decrease in interest rates.
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The aggregate supply curve shows:
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Level of real domestic output that will be produced at each possible price level.
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Which would most likely shift the aggregate supply curve? A change in:
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Prices of imported resources.
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Demand pull inflation is associated with an:
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Increase in aggregate demand.
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Cost-push inflation is characterized by a:
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Decrease in aggregate supply and no change in aggregate demand.
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When the federal government uses taxation and spending actions to stimulate the economy, it is conducting:
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Fiscal policy
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If the Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of an:
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Expansionary fiscal policy.
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If the Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of an:
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Contractionary fiscal policy

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