Unit 5 review

The total dollar value of all final goods and services produced within a country’s borders during a given year is called

• gross national product

• gross domestic product

• per capita income

• per capita production rate

Answer explanation

GDP is looking at all of the PRODUCTS being sold in the country

Per capita GDP (i.e. production divided by the population of a nation) is used to…

• compare GDP from year to year.

• compare nations’ production per person and standard of living

• tell which nation produces the greatest total amount of goods

• compare and contrast nations per capita

Answer explanation

Per capita means per person

Real GDP (i.e. production adjusted for price changes; inflation or deflation) is used to…

• tell which nation produced the good

• predict future year’s production

• Tell which nation produced the most goods

• compare production from year-to-year

Answer explanation

The value of money changes based off of inflation so real GDP adjusts for that to show if the country actually grew or if they just experienced a lot of inflation

When the town garment factory purchased new sewing machines that did not need workers to operate them, Saanvi could not find another job that utilized her skills as a sewing machine operator. What type of unemployment describes Saanvi’s situation?

• cyclical

• seasonal

• structural

• functional

Answer explanation

structural unemployment

noun

unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.

During the downturn in the economy in 2009, there was low demand for high-end, custom-made home products. Wood-Mode, a custom cabinet factory in Kreamer, PA, reduced their work force from 2,500 to 900. What type of unemployment describes this case?

• frictional

• structural

• functional

• cyclical

Answer explanation

Cyclical unemployment refers to the unemployment which is caused by the changes in business cycles, that is economic upturn or downturn

Deja has a Ph.D. in English literature, two master’s degrees, and speaks four languages. Unfortunately, because of poor economic conditions, a limited job market in central PA for her skills, and her inability to move away from her aging parents, she was forced to take a part-time job at the sales counter in Kohl’s department store. Which term below best fits Deja’s job situation?

• encouraged worker

• full employment

• discouraged worker

• underemployment

Answer explanation

Under-employment means work below one's capabilities

Which of the following would NOT be a part of the market basket used in calculating CPI (consumer price index)?

• groceries purchased at Weis Market

• income taxes paid to the federal government

• clothes purchased at Target

• groceries from Whole Foods

Answer explanation

It will always have to do with the government and not some random store

Which of the following would cause inflation in the economy?

• decreased consumer spending/aggregate demand

• lower cost of resources for businesses (such as wages)

• an increase in the supply of money in the economy

• higher cost of businesses

Answer explanation

The more you have the less it is worth.

Which of the following must occur for full employment to be reached in an economy?

• all workers seeking jobs are employed

• elimination of structural and frictional unemployment

• there is only natural unemployment occurring (i.e. no cyclical unemployment)

• all workers seeking employment

Answer explanation

Natural Unemployment is unemployment due to workers coming and going or searching for other work

What does expansionary monetary policy do?

• which will increase the money supply

• which will decrease the money supply

• more money is put into circulation

• buy new equipment or expand their facilities

Answer explanation

In this case they would be printing more money BEFORE putting said money into circulation