Measuring Economic Performance

Which economic indicator measures the total value of all the productivity in a country in one year?

• CPI

• GDP

• Inflation

• Unemployment

Gross domestic product (GDP) can be used to

• track inflation over one year

• measure the quality of life in a country

• compare the economies of different countries

• accurately show the distribution of wealth in a country

What kinds of things are hidden by GDP

• cost of living

• economic growth

• life expectancy

• pollution

GDP can be used to show

• strengths and weaknesses in the economy

• the value of American goods produced in other countries

• the effect of unemployment on the economy

• the rise in prices over time

Consumer price index (CPI) measures

• the rise in prices over time

• periods of economic growth

• the average prices of goods and services

• the total value of goods and services that are produced

How does high inflation affect people's spending habits?

• They spend their money as quickly as possible

• They spend more money

• They spend the same amount

• They spend less money

Is inflation good or bad?

• Good, because it is a sign of the economy growing due to increased demand

• Bad, because shortages of goods are making prices go up

• Good, because it means that prices are going down

• Bad, because demand has decreased and sales are going down

GDP is a good estimate of a country's production of goods and services.

• Yes. It's not perfect but it is pretty accurate

• It's ok, but it is not reliable because it can change every year

• CPI is a better measure of economic growth

• No. It does not include quality of life so it is not accurate.

How does inflation hurt lenders like banks?

• The purchasing power of money increases over time.

• The value of assets goes down.

• Banks lose profit on long-term loans.

• Banks make too much profit.

How does inflation hurt borrowers?

• Banks increase interest rates on loans.

• Banks stop issuing loans.

• Banks reduce the interest rates.

• Borrowers take out too many loans.