ECON - Unit 5 - Economics Terminology

ECON - Unit 5 In microeconomics, price helps determine both supply and demand. Which other factors also help determine each? ● ● ● ● Supply is determined by production costs, and demand is determined by need for the product. Supply is determined by production costs, and demand is determined by producer behavior. Supply is determined by consumer behavior, and demand is determined by aggregate demand. Supply is determined by producer behavior, and demand is determined by need for the product. Economic interactions involving which of the following would most likely be studied in macroeconomics? ● ● ● ● a family's finances trade at a duty-free shop on the U.S.-Canadian border International Monetary Fund policy a small company's supply contract for a local town Which best describes the purpose served by economic models within an economic system? ● ● ● ● Models identify patterns. Models determine the business cycle. Models control change. Models define global demand. Which best describes what injector factors bring to an economic system? ● ● ● ● factors of production imports consumers money The circular flow model examines interactions between which sectors of the economy? Check all that apply. ● private ● government ● business ● tech ● households The aggregate is ● ● ● ● a type of economic system. the total number of goods demanded or supplied. a form of revenue. the total profit made on sales. What area of economics focuses on the interactions between individual consumers and producers? ● ● ● ● aggregates macroeconomics microeconomics markets Which challenges faced by an economy are examined in macroeconomics? Check all that apply. ● ● ● ● ● declining innovation inflation unemployment bankruptcy decreased output In macroeconomics, the economy can best be understood through the use of ● ● ● ● money. models. pricing. debates. When economists determine that a nation's GDP has declined, they can point to this as a sign of ● ● ● ● economic shrinkage. economic growth. low unemployment. poor leadership. Jim lost his job in a car assembly factory to a robot and his skills will no longer be needed. Which terms can be used to describe Jim? Check all that apply. ● ● ● ● ● cyclically unemployed domestically unemployed frictionally unemployed structurally unemployed still employed ● unemployed Economists use gross national product (GNP) to measure ● ● ● ● economic output within a nation, regardless of ownership. the output of foreign-owned businesses within a nation. the output of a nation's citizens, regardless of where they are. any business activity taking place outside a country. There are four stages in an economic recovery. 1. increased production 2. rising demand (occurs twice) 3. increased hiring In which order do these stages occur? ● ● ● ● 2, 1, 2, 3 3, 2, 1, 2 2, 3, 1, 2 2, 1, 3, 2 Which best describes how governments respond to changes in the business cycle? ● ● ● ● Governments issue more currency. Governments refuse to pass a budget. Governments change their policies. Governments reduce spending. Income reaches the highest level at the _____ point of the business cycle. (peak) Which scenario best reflects the relationship between production and demand in a recession? ● ● ● ● Car dealerships have minimal overstock. Car dealerships are not restocking. Car dealerships cannot sell their stock. Car dealerships cannot obtain stock. Which best describes the nature of cause and effect in the context of the business cycle? ● ● ● ● Each effect has other effects. Causes and effects cannot be easily defined. A cause has multiple independent effects. Each effect has a cause. Which of the following is a characteristic of the prosperity phase of the business cycle? ● ● ● ● stagnant prices high levels of production ambivalence about the economy reduced incomes Why might buying a home during a recession be a good decision for some consumers? Check all that apply. ● ● ● ● ● Housing prices are down. It is easier to get a mortgage. Less demand means more options for buyers. Less demand means less competition with other buyers. More houses are on the market. During a recession, what is one way governments try to encourage growth? ● ● ● ● by increasing unemployment benefits by stopping government spending by requiring firms to maintain production by eliminating all tax breaks Which best describes how a recession develops as demand and production decrease? ● ● ● ● The recession accelerates. The recession spirals out of control The recession feeds on itself. The recession starts and stops Which is the best definition of inflation? ● ● ● ● a gradual reduction in the price of goods and services a gradual expansion in the price of goods and services an exponential reduction in the price of goods and services an exponential expansion in the price of goods and services How does demand-pull inflation differ from cost-push inflation? ● Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers. ● Demand-pull inflation is driven by producers, while cost-push inflation is driven by consumers. ● Demand-pull inflation is driven by the private sector, while cost-push inflation is driven by the government. ● Demand-pull inflation is driven by the government, while cost-push inflation is driven by the private sector. Typically, high inflation is a sign of ● ● ● ● a healthy economy because it results from a fall in production costs. a healthy economy because it results from a rise in consumer interest. a struggling economy because it results from a rise in production costs. a struggling economy because it results from a fall in consumer interest. Demand-pull inflation happens when the demand for goods ● ● ● ● remains very low. shifts up and down. matches the supply. rises above the supply. What is one consequence of stagflation? ● ● ● ● The economy drastically slows down as money loses its buying power. Producers cannot keep up with consumer interest and raise their prices. There are not enough workers to meet the rising level of production. Demand is too high and people spend more money than they should. The inflationary spiral explains the causes and effects of high inflation. The spiral usually begins with a rise in production costs. What is the direct effect? ● ● ● ● Producers raise prices to continue to make a profit. The government prints more money and lowers its value. Workers negotiate with employers to receive more money. Consumers need higher wages to keep up with rising prices. Inflation causes money to _____ its value over time. (lose) Stagflation occurs when high inflation combines with ● ● ● ● high unemployment and a low level of production. low unemployment and a high level of production. a drop in buying power and a rise in workers' wages. a rise in buying power and a drop in workers' wages. What are the signs of high inflation? Check all that apply. ● Production begins to fall. ● ● ● ● ● Production begins to rise. Interest rates decrease. Interest rates increase. Purchasing power falls. Banks grant fewer loans. What are the signs of low inflation? Check all that apply. ● ● ● ● ● ● Demand steadily rises. Demand steadily falls. Prices continue to increase. Prices continue to decrease. The economy grows in a healthy way. The economy stagnates and struggles. Cost-push inflation occurs when ● ● ● ● consumers show an interest in purchasing more goods. producers need more money to make and distribute goods. the government prints more money and pushes prices up. consumers have more money to spend on goods and services. What term is used in macroeconomics to describe the total supply and the total demand? ● ● ● ● capital inflation aggregate equilibrium When individuals are looking for jobs but are unable to find work, they are said to be _______ (unemployed) What is the difference between inflation and deflation? Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money. ● Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money. ● Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money. ● Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money. Read the paragraph. Government officials in Country M have determined that they need to take action to encourage the growth of their economy. To do this, they have introduced an incentive policy that offers citizens free education. This is extended to all individuals who sign a contract agreeing to work within their specific industry for the next ten years. Country M hopes to encourage economic growth by investing in ● ● ● ● education to reduce unemployment and increase production. new technologies to produce goods that are in great demand. resources that can be traded with other nations. research to develop goods that can be sold on a global scale. According to the business cycle, what characteristic indicates that a depression has been reached? ● ● ● ● The economy reaches recovery. A trough has occurred. The peak has passed. A period of property has ended. The most common measure of inflation is a statistic called the _______ ● ● ● ● nominal measurement consumer price index annual rate US of Bureau of labor statistic As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Check all that apply. ● cyclically unemployed ● domestically unemployed ● frictionally unemployed ● structurally unemployed ● still employed ● unemployed Which of the following best describes the circular flow model? ● ● ● ● The model represents the movement of money throughout the economy. The model represents the interactions within sectors. The model represents the flow of goods and services between sectors. The model represents the changing relationships between actors. How do consumers' feelings about the economy help contribute to growth? ● ● ● ● Positive consumer attitudes influence spending habits. Positive consumer attitudes increase job prospects. Positive consumer attitudes inspire increased production. Positive consumer attitudes can end a depression. In the circular flow model, factors of production flow to firms. Which of the following are the primary factors of production? Check all that apply. ● ● ● ● ● labor capital goods land services The exchange of factors of production for income occurs in the _______ market. (factor) What decisions does the business cycle help businesses make? Check all that apply. ● ● ● ● ● ● whether to stay at old facilities or move to new facilities whether to grow or shrink the business whether to keep or change products whether to increase or decrease production whether to hire or lay off workers whether to invest or save money