1. over the three year period, the united states experienced an increase in the real GDP, low inflation, and a declining unemployment rate. for this period, the united states
d. was in the middle of an economic boom
These are all signs of positive economic growth, although inflation can also tied to high GDP growth.
2. while inflation is a rise in the general level of prices, economic growth is a
d. sustained period during which the nation’s total output of good and services increases
3. the unemployment rate is usually calculated as the number of unemployed individuals
c. divided by the total number of people in the labor force
4. which of these would be counted when calculating the GDP of the united states ?
a. selling of goods produced in Michigan
is the total value of goods and services produced within the United States
5. which would be the appropriate monetary policy and goal during a period of high inflation?
c. increase interest rates in order to decrease the money supply
The idea is that, at a higher interest rate, there will be a higher relative cost to having money in circulation, which may reduce aggregate prices by reducing demand for goods.
6. a common criticism of GDP as an economic welfare measure is that it excludes
b. the dollar value of happiness levels
Economic growth can, at times, come at an unacceptable level of detriment to social welfare of its citizens. Think of things like worsening inequality, lower quality of life, and negative externalities, such as pollution.
7. GDP is a valid method of measuring the value of
c. final goods and services produced
8. if consumers increase their purchases of goods and services, then a likely outcome for our economy is
a. rising GDP
Consumption (purchases of goods and services) is an important factor in GDP.
9. on the news you hear that business investment has increased from last year to this year. all else equal, the most likely result is
b. increased economic growth
All else equal, increased investment should increase economic growth, since capital increases productivity.
10. for a market economy to function well, it is MOST important that laws be passed to protect the right to
11. which of these would be an opportunity coat of going to college?
d. the money you could have earned at a job
The opportunity cost is the income you missed out on by not working during those 4 years.