GDP & Economic Growth
100. What does GDP measure?
A) Total government spending
B) Total value of all final goods and services produced in a country
C) Average household income
D) Total exports minus imports
B) Total value of all final goods and services produced in a country
100. What does the unemployment rate measure?
A) Total population not working
B) Percentage of the labor force seeking work but unable to find it
C) Number of retirees and students
D) Number of part-time workers
B) Percentage of the labor force seeking work but unable to find it
100 - What is inflation?
A) A drop in wages
B) A general rise in prices that reduces purchasing power
C) Increase in GDP per capita
D) A decrease in the money supply
B) A general rise in prices that reduces purchasing power
100. Fiscal policy is controlled by:
A) Congress and the President
B) The Federal Reserve
C) State governments
D) Local banks
A) Congress and the President
100. What are the four phases of the business cycle?
A) Growth, decline, recovery, slump
B) Expansion, peak, contraction, trough
C) Boom, inflation, recession, stability
D) Fiscal, monetary, crisis, recovery
B) Expansion, peak, contraction, trough
200 - Which of the following is part of the GDP formula (C + I + G + (X − M))?
A) Consumer spending
B) All of the above (C, I, G, X–M)
C) Used goods
D) Black market sales
B) All of the above (C, I, G, X–M)
200. Which type of unemployment occurs when workers’ skills no longer match job openings?
A) Frictional
B) Structural
C) Cyclical
D) Seasonal
B) Structural
200. When demand exceeds supply, what type of inflation occurs?
A) Demand-pull inflation
B) Cost-push inflation
C) Sticky inflation
D) Structural inflation
A) Demand-pull inflation
200. What is one key function of the Federal Reserve?
A) Setting tax policy
B) Controlling interest rates and the money supply
C) Writing the national budget
D) Regulating imports
B) Controlling interest rates and the money supply
200. Which phase comes right after a trough?
A) Expansion
B) Peak
C) Contraction
D) Recession
A) Expansion
300. Which of the following is NOT counted in GDP?
A) Government construction spending
B) Used car sales
C) New office buildings
D) Exported wheat
B) Used car sales
300. What happens to unemployment during a recession?
A) It decreases
B) It stays the same
C) It increases
D) It is unaffected
C) It increases
300. A drought destroys crops, causing food prices to rise. What type of inflation is this?
A) Demand-pull
B) Cost-push
C) Sticky
D) Fiscal inflation
B) Cost-push
300. If the government increases spending to create jobs, what kind of policy is this?
A) Expansionary fiscal policy
B) Contractionary fiscal policy
C) Expansionary monetary policy
D) Contractionary monetary policy
A) Expansionary fiscal policy
300. What happens to GDP and inflation during a contraction?
A) GDP decreases and inflation slows
B) GDP increases and inflation rises
C) GDP and inflation both rise
D) GDP stays flat but inflation spikes
A) GDP decreases and inflation slows
400. What is the difference between nominal and real GDP?
A) Real GDP includes imports, nominal GDP doesn’t
B) Real GDP excludes government spending
C) Real GDP adjusts for inflation, nominal GDP does not
D) There is no difference
C) Real GDP adjusts for inflation, nominal GDP does not
400. Which is an example of cyclical unemployment?
A) A new graduate looking for their first job
B) A factory worker replaced by robots
C) A restaurant laying off workers during a downturn
D) A farmer not working during winter
C) A restaurant laying off workers during a downturn
400. Who benefits most from high inflation?
A) Borrowers
B) Savers
C) Retirees on fixed income
D) Workers with stagnant wages
A) Borrowers
400. What is the purpose of contractionary fiscal policy?
A) To slow inflation by cutting spending or raising taxes
B) To reduce unemployment
C) To boost exports
D) To increase borrowing
A) To slow inflation by cutting spending or raising taxes
400. What caused the 2008 Financial Crisis?
A) Risky mortgage lending and housing market collapse
B) Government overspending
C) Low interest rates by the Federal Reserve
D) Stock market regulations
A) Risky mortgage lending and housing market collapse
500. Why doesn’t a higher GDP always mean higher quality of life?
A) GDP doesn’t measure inequality or happiness
B) GDP includes informal work
C) GDP measures inflation only
D) GDP automatically equals high wages
A) GDP doesn’t measure inequality or happiness
500. Why can low unemployment sometimes lead to inflation?
A) People save more
B) Prices fall
C) Employers raise wages to attract scarce workers, increasing costs
D) The Fed cuts rates too soon
C) Employers raise wages to attract scarce workers, increasing costs
500. What can the Federal Reserve do to reduce inflation?
A) Lower interest rates
B) Raise interest rates
C) Print more money
D) Increase government spending
B) Raise interest rates
500. Which of the following is an example of monetary policy?
A) Congress passing a stimulus package
B) A tax cut signed by the President
C) The Federal Reserve raising interest rates
D) The government hiring more workers
C) The Federal Reserve raising interest rates
500. How did the government respond to the 2008 crisis?
A) Bailouts (TARP) and the Fed lowering interest rates
B) Raising taxes and cutting benefits
C) Banning mortgage loans
D) Reducing unemployment insurance
A) Bailouts (TARP) and the Fed lowering interest rates