Economics: Key Concepts in GDP, Unemployment, and Fiscal Policy

A decline in the price level is called:

deflation

Suppose a consumer buys a frozen dinner at the grocery store for $10. The frozen dinner manufacturer sold the frozen dinner to the store for $5. The frozen dinner company purchased the ingredients from a feed processing company for $2 and bought the box to put the dinner in for $1. How much has GDP increased?

$10

A country's _____________ is the total dollar value of all final goods and services produced within the country's borders in a given year.

gross domestic product

Which term describes the use of government spending and taxation to pursue economic growth, full employment, and price stability?

fiscal policy

Carlos lost his job at the local auto parts store due to the economic slowdown in his state. Carlos is experiencing:

cyclical unemployment

Natalie lost her job at the local bakery because the bakery lost customers due to a prolonged period of recession in the economy. Natalie is experiencing:

cyclical unemployment

GDP per capita helps us to better understand:

standard of living

Menu costs refer to the costs of a

changing listed prices

The plan for how the federal government will spend money in a particular fiscal year is called:

the federal budget

An alternating period of rising and falling real GDP is known as

a business cycle

TRUE OR FALSE: The unemployment rate can reach 0%

False

In the GDP expenditure approach, Investment spending represents spending on:

productive physical capital

_______ is a sustained increase in real GDP over time.

Economic growth

An increase in the price level that is extremely rapid over a short period of time is called:

hyperinflation

During the _______ of a business cycle, real GDP _______

expansion; rises

Shoe leather costs refer to:

the cost of time and effort involved in avoiding high prices associated with inflation

The type of unemployment that occurs while workers are searchine for a job is called

frictional unemployment

Which of the following transactions will be included in the calculation of GDP

Steve bought a new iphone

The amount of income available to households for saving and spending after taxes have been removed is

disposable income

Any combination of more government spending and lower taxes by the federal government to correct for a recession is called:

expansionary fiscal policy

People who give up and stop looking for work are called:

discouraged workers

A rise in the price level is called:

inflation

Transfer payments and tax revenues mostly serve as examples of:

direct tools of fiscal policy

Which of the following would be classified as an intermediate good (input).

carpenting used in building a new home for sale

a country has a civilian, non-institutional population 16 years or older of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is?

10%

Spending in excessof revenues for a government is called:

deficit spending

The term for government borrowing that takes money away from borrowing by firms in the private sector is:

crowding-out

Which of the following would be classified as consumption by a final user?

a new car purchased by an employee of H&R. Block for personal use?

Which of the following is an example of frictional unemployment?

Steve left his job to look for a better one

Economics is:

the study of choice under conditions of scarcity

The _____is the amount of money that the federal government has borrowed over time to fund budget deficits and has not yet repaid.

National debt

Which of the following would be included in US GDP?

the sale of a new home

The Consumer Price Index measures the overall level of prices faced by:

a typical urban household

(Table 42-1) The approximate rate of inflation between year 2 and 3 is:

5%

(Table 42-I) The approximate rate of inflation between Year 2 and Year 1 is:

25%

Which of the following is included in GDP for this year?

the purchase of tickets to the final four in men's college basket ball

The type of unemployment that results from a mismatch between job seekers and the types of jobs available, usually because of advances in technology, is called:

structural unemployment

How does contractionary fiscal policy usually affect the economy?

It encourages a lower price level and a higher unemployment rate