GDP/Business Cycle

Multiple Choice

What is Gross Domestic Product (GDP)?

• The value of all final goods and services produced within a country's border in a specific period of time

• The total amount of money in circulation within a country

• The total value of a country's exports minus imports

• The amount of money earned by the government through taxes

Multiple Choice

What are the three economic goals of policy makers?

• Economic growth, low unemployment, and stable prices

• High inflation, high interest rates, and high taxes

• Government control, income inequality, and international trade

• Consumer spending, business investment, and government spending

Drag and Drop

What does Real GDP represent?

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GDP adjusted for inflation

GDP measured in raw number of things produced

GDP including illegal activities

GDP including household production

Dropdown

What does the decrease in Real GDP in Greece indicate?

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Multiple Choice

How is the unemployment rate calculated?

• Number of unemployed people divided by the number of people in the labor force, times 100

• Number of unemployed people divided by the total population, times 100

• Number of unemployed people divided by the number of employed people, times 100

• Number of unemployed people divided by the number of discouraged workers, times 100

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What is frictional unemployment?

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Temporary unemployment or being between jobs

Unemployment due to lack of demand for a specific type of labor

Unemployment caused by a recession

Unemployment caused by technological advancements

Multiple Choice

What is the natural rate of unemployment?

• Unemployment rate when there is only frictional and structural unemployment

• Unemployment rate when there is 0% unemployment

• Unemployment rate when there is only cyclical unemployment

• Unemployment rate when there is only structural unemployment

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Why is falling prices (deflation) considered bad for the economy?

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It discourages people from spending

It increases the purchasing power of money

It leads to higher business costs

It stimulates economic growth

Multiple Choice

What is the business cycle?

• The expansion and contraction of an economy over time

• The fluctuation of interest rates in the stock market

• The rise and fall of consumer spending

• The increase and decrease of government debt

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Which component of GDP accounts for the highest percentage in most economies?

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Consumer spending

Business spending (investment)

Government spending

Net exports

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What is one way the government can stimulate the economy during a recession?

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Increase spending or cut taxes

Decrease spending or increase taxes

Implement strict regulations on businesses

Print more money

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What is one drawback of government stimulus during a recession?

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Increased debt

Decreased inflation

Higher interest rates

Reduced consumer spending

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A used car counts toward GDP

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True

False