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Economic Measures Quiz

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Questions and Answers

Explain what hyperinflation is and provide an example.

Hyperinflation is inflation at extremely high rates, for example, 1000, 1 million, or even 1 billion percent a year.

What does the Consumer Price Index measure and who does it represent?

The Consumer Price Index measures the average price of goods consumed by urban wage-earners.

Define Gross National Product (GNP) and distinguish it from Net National Product.

Gross National Product (GNP) is the total value of all the final goods and services made by a nation’s economy in a specific time (usually a year). GNP is different from net national product, which considers depreciation and the consumption of capital.

What is a recession and what are its associated indicators?

A recession is a downturn in economic activity associated with falling levels of GDP, consumption, and investment expenditure. Inflation and interest rates are declining, and the level of unemployment is rising. Signup and view all the answers

Explain the concept of double counting.

Double counting is an error that occurs when a total is obtained by summing gross amounts instead of net amounts. Signup and view all the answers

What is the Consumer Price Index (CPI) used for?

Measuring the average price of goods consumed by urban wage-earners (A) Signup and view all the answers

What does Gross National Product (GNP) represent?

Total value of all final goods and services made by a nation's economy (B) Signup and view all the answers

What is the purpose of measuring Personal Consumption Expenditure (PCE)?

Gauge how much earned income of households is being spent on current consumption (D) Signup and view all the answers

What is an intermediate good?

A product used to produce a final good or finished product (C) Signup and view all the answers

What does a recession entail?

A downturn in economic activity with falling levels of GDP, consumption, and investment expenditure (B) Signup and view all the answers

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