Economics Unit 3 Exam

When inflation occurs, the buying power of the dollar would

• decrease

• increase

• remain stable

• not be affected by inflation

Of the following groups, who would be the most impacted by inflation?

• members of strong labor unions

• people who do not have any debt

• employees who have received raises

• individuals living on fixed incomes

How is GDP defined?

• a description of the quality of life in a nation

• average value of production of intermediate goods

• a collection of all government assets that could earn money

• market value of all goods and services produced in a country

The Consumer Price Index (CPI) is best used to determine the

• Dow Jones Index

• rate of inflation

• unemployment rate

• currency exchange rates

GDP = C + I + G + Xn

According to the GDP formula above, what does the Xn represent?

• Government spending

• Net exports

• Consumer Spending

• Business Investments

The measure of the change in the cost of a fixed basket of goods and services is referred to as

• GDP

• Aggregate Supply

• CPI

• Aggregate Demand

Which statement describes economic activity in a recession?

• consumer spending declines

• business production increases

• the employment rate increases

• government regulations decrease

A period during which real GDP declines for two quarters in a row, or six consecutive months, is MOST LIKELY a

• peak

• recession

• recovery

• trough

Mitchell quits his job at the restaurant because he is moving. This is an example of

• cyclical unemployment

• frictional unemployment

• seasonal unemployment

• structural unemployment

Which of the following is most likely when the business cycle is in a trough?

• A) Unemployment is high

• B) Inflation is high

• C) Interest rates are rising

• D) Standard of living is rising