Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | aggregate supply | f. | national income
accounting | b. | aggregate demand | g. | recession | c. | depreciation | h. | stagflation | d. | gross domestic
product | i. | technological
progress | e. | gross national product | j. | trough |
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1.
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a system that collects macroeconomic statistics on production, income,
investment, and savings
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2.
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the dollar value of all final goods and services produced within a
country’s borders in a given year
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3.
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the total amount of goods and services in the economy available at all possible
price levels
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4.
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the loss of the value of capital equipment that results from normal wear and
tear
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5.
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a decline in GDP combined with a rise in the price level
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6.
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a prolonged economic contraction
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7.
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the lowest point in an economic contraction, when real GDP stops
falling
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8.
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an increase in efficiency gained by producing more output without using more
inputs
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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Products that would be used in calculating GDP include
a. | toys manufactured in China at a factory owned by a U.S. company. | b. | cars manufactured in
Tennessee at a factory owned by a Japanese automobile company. | c. | plastic manufactured
in a factory in Kentucky and sold to toy manufacturers around the world to make plastic
toys. | d. | cotton cloth manufactured in India and sold to clothes makers in the United
States. |
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10.
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An example of a durable good would be
a. | a used car. | c. | a box of cereal. | b. | a paperback book. | d. | a pack of baseball
cards. |
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11.
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Compared with the expenditure approach to calculating GDP, the income approach
is
a. | more practical. | b. | more accurate. | c. | preferred by the
average consumer. | d. | connected more strongly to stock market
performance. |
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12.
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GNP minus the cost of depreciation of capital equipment is
a. | real GDP. | c. | national income. | b. | nominal GDP. | d. | net national
product. |
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13.
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The main economic variables that affect business cycles include all of the
following EXCEPT
a. | interest rates. | c. | personal savings levels. | b. | external
events. | d. | business investment
levels. |
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14.
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An accurate statement about the Great Depression would be that
a. | it was a recession that became a depression because of World War
II. | b. | it was set off because of a sharp and unexpected rise in interest
rates. | c. | it was the most severe economic downturn in the history of industrial
capitalism. | d. | its effects and duration would have been even worse if it weren’t for a strong
economy in Japan and Europe at the time. |
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15.
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The agency that maintains the National Income and Product Accounts (NIPA)
is
a. | the U.S. Department of the Treasury. | c. | the U.S. Department of
Defense. | b. | the U.S. Department of the Interior. | d. | the U.S. Department of
Commerce. |
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16.
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An example of capital deepening would be
a. | permitting two workers to share one job. | b. | paying for an
employee to take college courses. | c. | laying off employees when a factory is
modernized. | d. | moving a manufacturing plant overseas where labor costs are
lower. |
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17.
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All of the following actions promote capital deepening EXCEPT
a. | raising taxes to pay for building roads. | b. | saving less and
spending more of one’s disposable income. | c. | borrowing money from foreign nations to invest
in building infrastructure in this country. | d. | a low population growth rate at the same time
that capital stock expands. |
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18.
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All of the following measures help to promote technological progress
EXCEPT
a. | increased wages for researchers. | b. | issuing a patent to a company that invents a
new product. | c. | training programs for workers. | d. | reducing the scale of the market for a new
product. |
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Short Answer
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19.
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In what year was the real GDP per capita the highest?
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20.
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Between which years did the greatest increase occur in real GDP per
capita?
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21.
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During which years was the economic growth rate approximately zero?
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22.
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Which 8-year span saw the greatest overall period of economic growth?
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Essay
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Critical Thinking
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23.
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Synthesizing Information Explain why final goods and services are
included in the calculation of GDP and intermediate goods are not.
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24.
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Analyzing Information Describe the four phases of the typical business
cycle.
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