Economics Topic 7 Review Questions with Correct Answers (Grade
A+)
Question 1: What is Aggregate Supply?
Answer: the total amount of goods and services available at all price levels
Question 2: What is an external shock?
Answer: an unpredictable shift outside the economy that affects the economy positively or negatively (ex:
natural disaster)
Question 3: Why did government spending increase in the 1930s?
Answer: lifted the economy out of the depression
Question 4: What happened to the Federal Funds rate in 2008?
Answer: lowered to encourage an investment
Question 5: What is pollution considered to be in economic terms?
Answer: negative externality
Question 6: Why does capital deepening create overall economic growth?
Answer: with more physical capital per worker, workers can be more productive; increased outcome with
higher wages
Question 7: What effect has educational attainment had on the U.S. Economy?
Answer: contributed to economic growth
Question 8: When a person's skill set does not match the available jobs, what type of unemployment is
that?
Answer: structural unemployment
Question 9: What reason is there for unemployment claims spiking 2009?
Answer: there was a recession in 2008
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A+)
Question 1: What is Aggregate Supply?
Answer: the total amount of goods and services available at all price levels
Question 2: What is an external shock?
Answer: an unpredictable shift outside the economy that affects the economy positively or negatively (ex:
natural disaster)
Question 3: Why did government spending increase in the 1930s?
Answer: lifted the economy out of the depression
Question 4: What happened to the Federal Funds rate in 2008?
Answer: lowered to encourage an investment
Question 5: What is pollution considered to be in economic terms?
Answer: negative externality
Question 6: Why does capital deepening create overall economic growth?
Answer: with more physical capital per worker, workers can be more productive; increased outcome with
higher wages
Question 7: What effect has educational attainment had on the U.S. Economy?
Answer: contributed to economic growth
Question 8: When a person's skill set does not match the available jobs, what type of unemployment is
that?
Answer: structural unemployment
Question 9: What reason is there for unemployment claims spiking 2009?
Answer: there was a recession in 2008
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