WGU D089 PRINCIPLES OF ECONOMICS UPDATED
COMPREHENSIVE EXAMS QUESTIONS AND ANSWERS SURE
A+
✔✔Structural Unemployment - ✔✔Unemployment that occurs because individuals lack
skills valued by employers.
✔✔Cyclical Unemployment - ✔✔Unemployment that results when the overall demand
for goods and services in an economy cannot support full employment. it occurs during
periods of slow economic growth or during periods of economic contraction.
✔✔Natural Rate of Unemployment - ✔✔The unemployment rate that would exist in a
growing and healthy economy from the combination of economic. social, and political
factors that exist at a given time.
✔✔Basket of Goods and Services - ✔✔A fixed set of consumer products and services
valued on an annual basis.
✔✔Base Year - ✔✔Starting point from which changes in prices are measured.
✔✔Consumer Price Index - ✔✔A measure of inflation that the U.S. Government
statisticians calculate on the price level from a fixed basket of goods and services that
represents the average consumers purchases.
✔✔Substitution Bias - ✔✔An inflation rate calculated using a fixed basket of goods over
time tends to overstate the true rise in the cost of living because it does not take into
account that the person can substitute away from goods whose prices rise considerably.
✔✔Quality and New Goods Bias - ✔✔Inflation calculated using a fixed basket of goods
over time tends to overstate the true rise in cost of living because it does not account for
improvements in the quality of existing goods or the invention of new goods
✔✔Hyperinflation - ✔✔Rapid excessive and out of control price increases in an
economy.
✔✔Menu Costs - ✔✔The cost to a firm resulting from changing its prices.
✔✔Shoe Leather Costs - ✔✔The cost of time and effort that people spin trying to
counter act the effects of inflation.
✔✔Purchasing Power - ✔✔The value of a currency expressed in terms of the amount of
goods or services that 1 unit of money can buy.
✔✔Indexed - ✔✔A price wage or in interest rate is adjusted automatically for inflation.
, ✔✔Cost of Living Adjustments - ✔✔A contractual provision that wage increases will
keep up with inflation
✔✔Adjustable Rate Mortgage - ✔✔A loan a borrower uses to purchase a home and
which the interest rate varies with the market interest rates
✔✔Aggregate Demand Aggregate Supply Model (AD-AS Model) - ✔✔A model that
shows what determines total supply or total demand for the economy and how total
demand in total supply interact at the macro economic level
✔✔Aggregate Supply - ✔✔The total supply of goods and services available to a
particular market from producers.
✔✔Aggregate Demand Curve - ✔✔Shows the total spending on domestic goods and
services at each price level
✔✔Aggregate Supply Curve - ✔✔The total quantity of output that firms will produce and
sell at each price level
✔✔Potential GDP - ✔✔The maximum quantity that an economy can produce given for
employment or its existing level of labor physical capital technology and institutions.
✔✔Short Run Aggregate Supply Curve - ✔✔Positive short run relationship between the
price level for output and real GDP holding the prices of inputs fixed
✔✔Long Run Aggregate Supply Curve - ✔✔Vertical line at potential GP showing no
relationship between the price level for output and real GDP in the long run
✔✔Full Employment GDP - ✔✔Another name for potential GDP when the economy is
producing at its potential and unemployment is at the natural rate of unemployment.
✔✔Stagflation - ✔✔When an economy experiences stagnant growth and high inflation
✔✔Barter - ✔✔Train one good or service for another without using money.
✔✔Double Coincidence of Wants - ✔✔A situation in which 2 people each want some
good or service that the other person can provide.
✔✔Medium of Exchange - ✔✔Whatever is widely accepted as a method of payment
✔✔Store of Value - ✔✔Something that serves as a way of preserving economic value
they could be spent or consumed in the feature.
COMPREHENSIVE EXAMS QUESTIONS AND ANSWERS SURE
A+
✔✔Structural Unemployment - ✔✔Unemployment that occurs because individuals lack
skills valued by employers.
✔✔Cyclical Unemployment - ✔✔Unemployment that results when the overall demand
for goods and services in an economy cannot support full employment. it occurs during
periods of slow economic growth or during periods of economic contraction.
✔✔Natural Rate of Unemployment - ✔✔The unemployment rate that would exist in a
growing and healthy economy from the combination of economic. social, and political
factors that exist at a given time.
✔✔Basket of Goods and Services - ✔✔A fixed set of consumer products and services
valued on an annual basis.
✔✔Base Year - ✔✔Starting point from which changes in prices are measured.
✔✔Consumer Price Index - ✔✔A measure of inflation that the U.S. Government
statisticians calculate on the price level from a fixed basket of goods and services that
represents the average consumers purchases.
✔✔Substitution Bias - ✔✔An inflation rate calculated using a fixed basket of goods over
time tends to overstate the true rise in the cost of living because it does not take into
account that the person can substitute away from goods whose prices rise considerably.
✔✔Quality and New Goods Bias - ✔✔Inflation calculated using a fixed basket of goods
over time tends to overstate the true rise in cost of living because it does not account for
improvements in the quality of existing goods or the invention of new goods
✔✔Hyperinflation - ✔✔Rapid excessive and out of control price increases in an
economy.
✔✔Menu Costs - ✔✔The cost to a firm resulting from changing its prices.
✔✔Shoe Leather Costs - ✔✔The cost of time and effort that people spin trying to
counter act the effects of inflation.
✔✔Purchasing Power - ✔✔The value of a currency expressed in terms of the amount of
goods or services that 1 unit of money can buy.
✔✔Indexed - ✔✔A price wage or in interest rate is adjusted automatically for inflation.
, ✔✔Cost of Living Adjustments - ✔✔A contractual provision that wage increases will
keep up with inflation
✔✔Adjustable Rate Mortgage - ✔✔A loan a borrower uses to purchase a home and
which the interest rate varies with the market interest rates
✔✔Aggregate Demand Aggregate Supply Model (AD-AS Model) - ✔✔A model that
shows what determines total supply or total demand for the economy and how total
demand in total supply interact at the macro economic level
✔✔Aggregate Supply - ✔✔The total supply of goods and services available to a
particular market from producers.
✔✔Aggregate Demand Curve - ✔✔Shows the total spending on domestic goods and
services at each price level
✔✔Aggregate Supply Curve - ✔✔The total quantity of output that firms will produce and
sell at each price level
✔✔Potential GDP - ✔✔The maximum quantity that an economy can produce given for
employment or its existing level of labor physical capital technology and institutions.
✔✔Short Run Aggregate Supply Curve - ✔✔Positive short run relationship between the
price level for output and real GDP holding the prices of inputs fixed
✔✔Long Run Aggregate Supply Curve - ✔✔Vertical line at potential GP showing no
relationship between the price level for output and real GDP in the long run
✔✔Full Employment GDP - ✔✔Another name for potential GDP when the economy is
producing at its potential and unemployment is at the natural rate of unemployment.
✔✔Stagflation - ✔✔When an economy experiences stagnant growth and high inflation
✔✔Barter - ✔✔Train one good or service for another without using money.
✔✔Double Coincidence of Wants - ✔✔A situation in which 2 people each want some
good or service that the other person can provide.
✔✔Medium of Exchange - ✔✔Whatever is widely accepted as a method of payment
✔✔Store of Value - ✔✔Something that serves as a way of preserving economic value
they could be spent or consumed in the feature.
