Only final goods are counted when GDP is measured.
True
False
2
1
The main cause of unemployment is reduced demand for the goods and services being provided by various workers.
True
False
3
1
If wages increase faster than gains in productivity, the cost of producing goods decreases and prices fall.
True
False
4
1
Some nations have such abundant resources that they never experience economic hardships.
True
False
5
1
The last depression in the United States occurred during the 1980s.
True
False
6
1
Inflation can sometimes occur when the demand for goods and services is greater than the supply.
True
False
7
1
People with poor credit ratings pay a higher interest rate to borrow money than people with good credit ratings.
True
False
8
1
Capital projects involve spending by businesses for employee training and benefits.
True
False
9
1
When you buy a corporate bond, you have lent money to the company.
True
False
10
1
A well-run business should never need to borrow money.
True
False
11
1
Which of the following would NOT be included in a measure of GDP?
Ivanhoe Publications exports $25 million of books to Ireland.
The U.S. government buys office supplies worth $30 million from The Supply Closet.
You give your car a tune-up and change the oil yourself.
You hire Larry’s Lawn Care to cut your grass once per week during the summer for $50/week.
12
1
An increase in GDP per capita means that
an economy is growing
an economy is in a recession
unemployment is too high
individuals are not saving enough.
13
1
In the United States, the labor force consist of all people above age ___ who are actively working or seeking work.
21
18
16
14
14
1
A period of economic recovery
is considered the high point of the business cycle
is characterized by a rise in GDP
usually causes businesses to lower production
is marked by widespread unemployment.
15
1
Inflation
is least harmful to people on fixed incomes
causes the buying power of the dollar to increase
generally occurs at the same rate from year to year
can sometimes stimulate economic activity if it is kept relatively low.
16
1
The interest rate financial institutions are charged to borrow funds from Federal Reserve banks is called the
discount rate
prime rate
certificate of deposit rate
T-bill rate
17
1
The money for capital projects usually comes from
personal savings
stock investments
bonds
all of the above
18
1
Which type of business sells stock?
partnership
corporation
proprietorship
all businesses sell stock
19
1
People who buy bonds are called
debtors
owners
creditors
consumers
20
1
The total amount owed by the federal government is called the
budget surplus
budget deficit
balanced budget
national debt
21
1
A period in the business cycle when most people who want to work are working, wages are good, and GDP growth increases.
recession
deflation
prosperity
productivity
22
1
The production output in relation to a unit of input.
inflation
productivity
personal income
stock
23
1
A period in the business cycle marked by a long period of high unemployment, weak consumer sales, and business failures.
inflation
recession
deflation
depression
24
1
An increase in the general level of prices.
unemployment rate
prosperity
inflation
bond
25
1
The portion of people in the labor force who are not working.
unemployment rate
prosperity
depression
productivity
26
1
Represents ownership in a corporation.
bond
stock
personal income
inflation
27
1
Salaries and wages as well as investment income and government payments to individuals.
inflation
stock
personal income
prosperity
28
1
A period in the business cycle when demand begins to decrease, unemployment begins to rise, and GDP growth slows for at least two quarters in a calendar year.
deflation
recession
prosperity
productivity
29
1
Represents debt for an organization.
bond
depression
inflation
recession
30
1
A decrease in the general level of prices
inflation
recession
productivity
deflation
31
1
The total dollar value of all final goods and services produced in a country during one year is called
retail sales
gross domestic product
business cycle
price index
32
1
The sales of durable and nondurable goods bought by consumers is called
retail sales
business cycle
price index
Capital spending
33
1
The movement of the economy from one condition to another and back again is called the
gross domestic product
retail sales
Capital spending
business cycle
34
1
A(n) ______ is a number that compares prices in one year with some earlier base year.
gross domestic product
retail sales
price index
business cycle
35
1
_____________ refers to money spent by a business for an item that will be used over a long period.
Capital spending
retail sales
business cycle
gross domestic product
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