ECONOMICS 21-25 QUESTIONS AND ANSWERS 100% PASS

ECONOMICS 21-25 QUESTIONS AND ANSWERS 100% PASS The gross domestic product (GDP) shrunk by 2 percent over a 12-month period. What can you infer about the economy? The GDP indicates an economic contraction. To calculate _[blank]_, the quantity of final goods and services are multiplied by the price. Which best completes the sentence? gross domestic product What is included in the consumer price index (CPI)? a sampling of goods across industries What is the consumer price index (CPI)? a measure of inflation What is defined as a common indicator of an economy's health based on the total value of goods and services produced during a fiscal year? gross domestic product What is an economic indicator that calculates the total value of goods and services produced during a fiscal year that also factors in inflation? real gross domestic product The _[blank]_ approach adds up the value at each stage of production, where the value added is the total sales minus the value of intermediate inputs. Which accurately completes the sentence? production What is defined as the market value of all final goods and services produced in a country in a specific time frame? gross domestic product One way that a weak economy can affect _[blank]_ is that it can make accepting and distributing goods more difficult, as well as intensify scarcity. Which accurately completes the sentence? foreign trade One way that a strong economy affects _[blank]_ is that it makes business owners more prone to take risks. Which accurately completes the sentence? entrepreneurship hat does a decline in gross domestic product (GDP) communicate to economists? The total dollar value of all final goods and services within a 12-month period decreased. What is included in the calculation of GDP? ollar value of final goods and services What is the formula for measuring GDP? final goods and services multiplied by the price Which accurately describes the consumer price index (CPI)? It is the most cited index for tracking prices and measuring inflation. Which accurately describes price indexes economists use to monitor prices and inflation? Consumer price indexes economists use to measure prices and inflation include the consumer price index, the producer price index, and the GDP deflator. What does the consumer price index (CPI) measure inflation When would nominal GDP appear lower than real GDP? when the rate of inflation is negative When measuring GDP, it is important to note that businesses' goods flow to consumers, whose payments for those goods provide profits for those businesses. This process can be depicted as flowing in a _[blank]_ shape. Which accurately completes the sentence? circular What does gross domestic product (GDP) measure? economic growth a rising unemployment rate a decline in GDP What does the list indicate about economic growth? The economy is in a decline. What are potential causes of a business cycle expansion? *A new industry is developed. *Production increases to meet new demands. *Interest rates are lowered to encourage borrowing. What are potential causes of a business cycle contraction? *War causes people to become reluctant to purchase goods. *Production is slowed to minimize excess inventory. *Interest rates are raised, making it more expensive to borrow money. How can the government combat structural unemployment? implement new training programs to help workers acquire new skills Which type of unemployment is caused by a contraction of the business cycle? cyclical How can the government combat structural unemployment? implement new training programs to help workers acquire new skills Which could cause rapid inflation? a significant wage increase What would be a government response to slow inflation? A government could raise taxes to decrease the money in circulation. Which is an example of absolute poverty? The Smith family lives in an unsafe, decaying apartment with mold issues, and they oftentimes cannot afford food each day. Joanne, a former account manager at a large corporation, recently lost her job. Although her family can still pay its bills and afford groceries, the family no longer has discretionary income for leisure activities, such as going to restaurants or movie theaters. They have much less money compared to their friends and neighbors. This is an example of _[blank]_. Which most accurately completes the sentence? relative poverty What is one reason economic growth is very important for the United States? Economic growth can help raise the standard of living for people. What is true regarding economic growth? *Economic growth reduces the consumer price index (CPI). *Economic growth creates jobs and in turn provides income. *Economic growth raises per capita gross domestic product (GDP). In what way does gross domestic product (GDP) measure a country's economic health? It calculates the value of everything produced, which determines if the economy is growing. What is a desirable long-term growth rate of the GDP to show the economy is healthy while minimizing effects of inflation? 2-3 % What is true about labor and economic growth? A skilled supply of labor enables producers to innovate and grow. How do improvements in technology impact economic growth in the long run? hey make production more efficient, which leads to growth. Which can lead to an economic expansion? development of a new industry Why might the economy slow during wartime? *people might stock up on products, which would cause inflation. * A government may reduce tariffs with rival nations. *People might choose to save money instead of buy new products. Why does the Federal Reserve often drop interest rates during an economic contraction? to encourage borrowing Which describes frictional unemployment? Floyd quits his job at the store to look for a better-paying job in manufacturing. Which is most likely to be implemented by the government to overcome structural unemployment? courses or programs to help workers develop new skills What does the consumer price index (CPI) measure? It tracks increases in prices to measure inflation. How has income inequality in the United States changed? Income inequality has increased partly due to the rise of single parents. Income inequality has increased partly due to the demand for skilled workers. Which antipoverty program offers medical insurance for low-income individuals and families? Medicaid The Federal Reserve is considered to be the _[blank]_ bank of the United States of America. Which correctly completes the sentence? national Why did Congress create the Federal Reserve? It was created to provide economic stability and a remedy for uninsured investments. The Federal Reserve Bank is responsible for entering _[blank]_ into circulation. Which correctly completes the sentence? money The _[blank]_ nominates chairmen and vice chairmen to the Federal Reserve. Which correctly completes the sentence? president How does Congress hold the Federal Reserve accountable? Federal Reserve appointees provide testimony to congressional committees. The Federal Reserve is audited by the Government Accountability Office (GAO). What is the purpose of the Office of Inspector General? It conducts audits of the Federal Reserve to eliminate fraud and waste. What was the name of the money the Continental Congress authorized? continentals Which was most used by early US colonists to purchase and trade goods? barter system What is a basic function of the Federal Reserve? The Federal Reserve enters currency into circulation. According to its charter, the Federal Reserve Bank is governed by a(n) _[blank]_ of governors. Which correctly completes the sentence? board The Federal Reserve's board of governors consists of _[blank]_ members. Which correctly completes the sentence? 7 Where are the Federal Reserve branches located? throughout US How long can governors and the chair of the Federal Reserve serve? 14 years How does an individual become a governor of a Federal Reserve branch? the president appoints Which entity regulates the Federal Reserve Bank by requiring board governors to testify about their work? congress Which form of currency was authorized by the Continental Congress and eventually became worthless due to inflation? continentals Which accurately describes the barter system during the colonial era of the United States before a national currency evolved? tobacco and animal skins Which accurately describes how the Federal Reserve is funded? The Federal Reserve earns interest from its ownership of government securities. The Federal Reserve Board consists of which of the following members? governor (five positions) vice chairman of the board chairman of the board When a nation has a(n) _[blank]_ advantage, they can produce a good or service at a lower cost than another nation that has the same resources. Which best completes the sentence? absolute When a nation has a(n) _[blank]_ advantage, they can produce a good or service at a lower cost than another nation that has the same resources. Which best completes the sentence? comparative What were the results of the Smoot-Hawley Tariff passed by Congress in 1930? Thousands of imported goods were taxed, resulting in a trade freeze between the United States and several countries. How much did the United States earn in exports in 2015? 2.3 trillon What is a good or service sold to a foreign nation? export When the world was on the gold standard, which system was used to determine the value of a country's currency as compared to another country's currency? fixed exchange rate Under which system do the forces of supply and demand establish the value of a country's currency as compared to another country's currency? flexible exchange rate When does a country have a trade deficit? when the cost of a country's imports exceeds the value of its exports When does a country have a trade surplus? when the cost of a country's exports exceeds the cost of its imports