UNIT 5 REVIEW

ECONOMICS

MRS. REYEROS

1. Compared with the expenditure approach to calculating GDP, the income approach is 2. The main economic variables that affect business cycles include all of the following EXCEPT 3. The agency that maintains the National Income and Product Accounts (NIPA) is 4. An example of capital deepening would be 5. All of the following actions promote capital deepening EXCEPT 6. All of the following measures help to promote technological progress EXCEPT 7. The calculation of GDP would include 8. Compared with the income approach to calculating GDP, the expenditure approach is 9. An accurate statement about the Great Depression would be that 10. How is nominal GDP converted into real GDP? 11. Which of the following would be counted in this years GDP? 12. In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the 13. Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply? 14. In a typical business cycle, what stage immediately follows a peak? 15. Higher savings leads to higher GDP in the future because 16. What is the difference between seasonal unemployment and structural unemployment? 17. The market basket that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following? 18. How has the distribution of income in the United States changed over the last 20 years? 19. What is workfare? 20. What does it mean when a person is underemployed? 21. What is a major problem for businesses during a period of chronic inflation? 22. According to the cost-push theory, what is responsible for inflation? 23. If the number of people employed is 150,000 and the labor force is 160,000, the employment rate is 24. A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of 25. If the CPI for 2001 was 177 and the CPI for 2002 was 180, the rate of inflation between 2001 and 2002 was 26. What is the possible consequence of the following scenario? Because of high unemployment rates in the country of Lavernia, employers offer higher wages. To meet

their higher payroll costs and maintain profits, they charge consumers more for goods and services. 27. Which of the following people is most likely to be classified as working poor? 28. Which of the following is most likely to be worried about high inflation? 29. If Bob loses his job at the GM plant because car manufacturing is slow die to a downturn in the economy, you can conclude that he is 30. In a real economy, which two factors can change the level of nominal GDP? 31. Four factors, both expected and unexpected, perpetuate the business cycle. Which of the following is NOT one of these factors? 32. Be able to read a chart about the effects of capital deepening 33. Ten years ago, a house sold for $54,000. Today the same house is valued at $108,000. What has inflation done to consumers purchasing power? 34. If you lived on a fixed income, how would you be affected by inflation? 35. Be able to read the Lorenz curve. 36. Key Terms: aggregate supply; aggregate demand; depreciation; GDP; Gross national product; national income accounting; recession; stagflation; technological progress; trough; contraction; depreciation; leading indicators 37. Be able to interpret a chart with GDP per capita. 38. Be able to interpret a chart about income distribution.