GDP
GDP measures the value of what?
What is all final goods and services produced in a country during a period of time
What are the four phases of the business cycle?
What is Prosperity, Recession, Depression, Recovery
What is inflation?
What is a general rise in prices
What do interest rates represent?
What is the cost of borrowing money
What is the unemployment rate?
What is percent of the labor force without a job and looking for work
What makes GDP per capita a better measure than GDP alone?
What is it divides GDP by population, showing output per person
Which phase has the highest unemployment rate?
What is Depression
What is deflation?
What is a general fall in prices
If interest rates are high, do people borrow more or less?
What is less
What are the three main business cycle indicators we studied?
What are GDP, unemployment rate, and inflation.
Would babysitting your little brother for free count in GDP? Why or why not?
What is no — it’s not a market transaction, so it isn’t counted.
In which phases do businesses usually invest in new equipment?
What is Prosperity or Recovery
Why can deflation hurt businesses?
What is consumers wait to buy, sales drop, businesses cut jobs
How do low interest rates affect businesses?
What is they can borrow more cheaply to expand
Quantitative data vs. qualitative data — what’s the difference?
What is Quantitative = numbers; Qualitative = opinions/surveys
If pay a landscaping company to mow your own lawn, is it counted in GDP? Why or why not?
What is yes — it’s a market transaction recorded by a business, so it’s counted in GDP.
In which phase of the business cycle do consumers cut back on big purchases and businesses possibly begin layoffs?
What is Recession
Inflation measured by CPI can feel deceptive. Why?
What is CPI uses a fixed basket of goods, but people buy different things
How do interest rates affect consumers?
What is High = loans, mortgages, credit cards cost more; Low = cheaper borrowing
If unemployment is high, GDP is falling, and inflation is low, what phase of the business cycle are we in more than likely in?
What is Recession
Name the four components of GDP.
What are consumer spending, business spending, government spending, net exports
Give one consumer and one business behavior during a recession.
What is consumers cut back spending; businesses reduce production or lay off workers
Name the two causes of inflation.
What are demand-pull and cost-push
How do interest rates affect the government?
What is higher rates make paying off debt more expensive
Define “economic indicators.”
What is data that shows the overall health of the economy