GDP & INDICATORS
A new gaming console is produced and sold in the U.S. this year. Does it count toward current GDP?
YES — It is a new final product produced this period.
Businesses cut jobs, consumers spend less, and GDP falls. Which stage?
Recession
Many coffee shops compete using different flavors, branding, service, and atmosphere.
Monopolistic Competition
Prices for groceries, clothes, and other goods are generally rising. What is happening?
Inflation
A person buys shares of a corporation. What does the person now have?
Stock / ownership in the corporation
A family buys a used car from another family. Does that sale count toward current GDP?
NO — The car was produced in an earlier period.
The economy reaches its LOWEST point and the decline stops. Which stage?
Trough
Only four large companies dominate a market and react closely to one another’s decisions.
Oligopoly
Prices across the economy are generally declining. What is happening?
Deflation
A restaurant keeps its menu prices the same but adds faster service, a rewards program, and free delivery to attract customers. What type of competition is this?
Nonprice Competition
A factory improves its process and workers make more products per hour. What increased?
Productivity
Stores add workers, production rises, and GDP increases. Which stage?
Expansion
Hundreds of growers sell nearly identical corn and have little control over price.
Perfect Competition
A lender charges 6% to borrow money. What does the 6% represent?
Interest Rate
A market has MANY sellers, but brands, features, and service differ. Which structure?
Monopolistic Competition
A country exports $120 billion and imports $95 billion. What are net exports?
$25 billion
Activity is very high, but growth has reached its highest point before decline. Which stage?
Peak
One provider serves an area and it is extremely expensive for a competitor to enter.
Monopoly
Interest rates rise. Does borrowing generally become MORE or LESS expensive?
More expensive
GDP is rising and hiring is increasing, while prices across the economy are generally rising. Name BOTH concepts
Expansion + Inflation
Name all FOUR components of GDP.
Consumer spending, business investment, government spending, and net exports
TRICK: Put the stages from the WORST economic position to the BEST.
Trough → Recession → Expansion → Peak
Two markets both have MANY sellers. What clue separates Perfect from Monopolistic Competition?
Same vs. differentiated products — Perfect = same; Monopolistic = differentiated.
A customer notices prices are rising while the rate charged on a loan has also increased. Name BOTH economic terms.
Inflation + Interest Rate
A city has ONE water provider while the overall economy has falling GDP and job cuts. Name BOTH concepts.
Monopoly + Recession