Inflation is defined as: A temporary decline in the general price level, An increase in the general price level over time, No change in the general price level, A decrease in the g... Inflation is defined as: A temporary decline in the general price level, An increase in the general price level over time, No change in the general price level, A decrease in the general price level over time. What is the primary focus of economists when analyzing unemployment? Cyclical unemployment, Structural unemployment, Frictional unemployment, All types of unemployment. Nominal GDP measures aggregate output using: Base year prices, Constant prices, Average prices over time, Current prices. What are the turning points of a business cycle? Peak and trough, Trough and deflation, Peak and inflation, Trough and stagflation. What does real GDP represent? The total expenditure on goods and services in an economy, The total value of goods and services produced in an economy, The total income earned by individuals in an economy, The total value of imports and exports in an economy. What does the unemployment rate measure? The percentage of part-time workers, The percentage of discouraged workers, The percentage of the labor force without a job, The percentage of the population without a job. Which approach to measuring GDP focuses on the total value of all goods and services purchased by households, businesses, government entities, and foreign buyers? The expenditure approach, The aggregate demand approach, The Keynesian approach, The multiplier approach. When analyzing an economy's performance, it is important to consider: GDP as the sole indicator of well-being, The underground economy as the main driver of economic growth, The limitations of GDP in measuring economic performance, GDP growth as the primary goal of economic policy. What is the output gap in the context of a business cycle? The difference between inflation and deflation, The difference between the peak and the trough, The difference between actual output and potential output, The difference between government spending and taxation. Business cycles are primarily caused by changes in: Aggregate demand only, Aggregate supply only, Aggregate demand and aggregate supply, Government fiscal policies. Which of the following would be considered a limitation of using GDP as a measure of economic well-being? GDP does not account for changes in the price level, GDP does not reflect income inequality, GDP does not consider government expenditures, GDP does not capture the informal economy. Frictional unemployment occurs when: There is a mismatch between job seekers and available jobs, There is a downturn in the business cycle, The unemployment rate exceeds the natural rate, Individuals are temporarily between jobs. The GDP deflator measures changes in the: Overall level of prices in the economy, Standard of living over time, Cost of a fixed basket of goods and services, Average income of consumers. Potential output is also known as: Aggregate demand output, Trough output, Peak output, Full-employment output. Income inequality refers to: The uneven distribution of income within a society, The equal distribution of wealth among all individuals, The absence of income disparities in an economy, The equal distribution of income among all individuals. Unexpected inflation arbitrarily redistributes wealth from: Savers to investors, Consumers to producers, Lenders to borrowers, Employers to employees. When inflation is higher than expected, which of the following groups is likely to benefit? Savers with variable interest rates, Lenders with fixed interest rates, Borrowers with fixed interest rates, Investors in the stock market. What does nominal GDP represent? GDP measured in constant dollars, GDP adjusted for population size, GDP measured at current market prices, GDP adjusted for inflation. Deflation refers to: No change in the general price level, A decrease in the general price level, A temporary increase in the general price level, An increase in the general price level. What is the labor force participation rate? The percentage of the labor force without a job, The percentage of the adult population unemployed, The percentage of the adult population employed, The percentage of the adult population in the labor force. Disinflation is characterized by: Rapidly increasing inflation rates, No change in the inflation rate, Stable and low inflation rates, Rapidly decreasing inflation rates. GDP growth may not accurately reflect improvements in quality of life because it fails to consider: The value of intangible assets such as knowledge and skills, The impact of government policies on economic growth, The impact of globalization on international trade flows, The role of consumer confidence in driving economic expansion. Changes in employment and the labor market affect: Neither the unemployment rate nor the labor force participation rate, The labor force participation rate only, Both the unemployment rate and the labor force participation rate, The natural rate of unemployment only. Real variables, such as real wages, are: Measured using nominal values without considering inflation, Unaffected by changes in the price level, Calculated by dividing the CPI by the inflation rate, Adjusted for inflation to reflect changes in purchasing power. How is real GDP calculated using the base year method? By adjusting nominal GDP for changes in population, By adding inflation to nominal GDP, By multiplying nominal GDP by the GDP deflator, By dividing nominal GDP by the GDP deflator. What does structural unemployment result from? Changes in labor force characteristics, Economic downturns in the business cycle, Mismatches between job seekers and available jobs, Temporary transitions between jobs. Which of the following is a cost of unexpected inflation? Increased purchasing power for consumers, Higher real interest rates for borrowers, Uncertainty in economic planning and decision-making, Lower nominal wages for workers. Real GDP measures aggregate output using: Current prices, Constant prices, Average prices over time, Base year prices. What does nominal GDP represent? The total value of imports and exports in an economy, The total expenditure on goods and services in an economy, The total value of goods and services produced in an economy, The total income earned by individuals in an economy. Which of the following is a limitation of the unemployment rate? It may understate the level of joblessness, It accounts for part-time workers, It reflects changes in labor force characteristics, It includes discouraged workers. Inflation erodes the purchasing power of money over time, which means that: The value of money increases, Prices of goods and services decrease, People can buy less with the same amount of money, People can buy more with the same amount of money. The natural rate of unemployment is the sum of: Frictional and structural unemployment, Actual and structural unemployment, Cyclical and frictional unemployment, Cyclical and structural unemployment. In the circular flow diagram, which sector represents the accumulation of wealth and the provision of capital resources to businesses? The financial sector, The foreign sector, The household sector, The government sector. Which of the following is a potential cost of high inflation? Increased real wages for workers, Higher purchasing power for consumers, Lower interest rates for borrowers, Reduced investment in the economy. Cyclical unemployment is defined as the deviation of the actual unemployment rate from: The natural rate of unemployment, The full-employment real output, The frictional unemployment rate, The structural unemployment rate. Which of the following is a limitation of using GDP as a measure of economic performance? It fails to capture the value of unpaid household work, It accounts for the distribution of income and wealth, It includes all nonmarket transactions, It accurately captures the impact of externalities. The labor force is comprised of: Employed and unemployed individuals, Employed individuals only, Discouraged workers and part-time workers, Unemployed individuals only. Which of the following is a measure of well-being that goes beyond GDP? Consumer Price Index (CPI), Human Development Index (HDI), Economic Freedom Index (EFI), Producer Price Index (PPI). What are the phases of a business cycle? Expansion and deflation, Recession and inflation, Recession and expansion, Expansion and stagflation. When calculating GDP using the income approach, which of the following would be included as a component of income? Government transfer payments, Imports, Undistributed corporate profits, Personal savings. Read more