GDP
Which of the following is the primary measure of a nation’s income and output?
GDP
How does capital investment lead to economic growth?
Businesses use the money invested to hire people and buy more equipment
Auto-workers who were laid off as a result of the 2008 recession suffered from
Cyclical unemployment
Describe the purchasing power of a person who hasn’t received a raise in three years and whose savings earn .5% while the inflation rate is 2%.
His purchasing power is decreasing
Carol, a single mother who works 35 hours a week at a job that pays slightly above minimum wage
working poor
Why are intermediate goods not included in GDP?
To avoid counting them twice in GDP
When the economy is working properly, what is the unemployment rate?
4 to 6 percent
What does it mean when a person is underemployed?
The person has a job but they are overqualified for it.
What would be the result of a combination of inflation and stagnant wages?
Goods would be more difficult to afford.
What are the parts of the business cycle?
Peak, Expansion, Contraction, Trough
Is Depreciation counted in GDP or GNP?
Either
In which category would spending grow if the price of gasoline increased?
Transportation
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at a large urban university, she is
Frictional unemployed
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
Decreased by 10%
If real GDP falls for two consecutive quarters, the economy is said to be in a ______
Recession
What is one way that the gross domestic product differs from gross national product?
GDP does not include income earned outside the U.S. firms and citizens and GNP does.
Why do you think the Federal Reserve Bank sometimes lowers interest rates on loans to commercial banks?
To encourage borrowing to stimulate economic activity
A person with a graduate degree in psychology who works a part-time job in a coffee shop is
Underemployed
When I was younger I could go to the movies and buy popcorn, coke, and candy for .50
Prices are much higher than they were when he was a young man.
The growth of the internet has caused newspaper circulation to fall. What type of unemployment might this printing press operator face in the future?
Structural unemployment
what happened to the GDP in 2008?
The GDP fell because of a major recession.
An example of an external shock?
A destructive earthquake
What is workfare?
A program that requires work in exchange for assistance
The total amount of goods and services in the economy available at all possible price levels
Aggregate Supply
What is the difference between real and nominal
Nominal GDP measured in current prices
Real GDP is measured in constant, or unchanging, prices