Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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GDP does not include
a. | the value of the work you do for yourself. | b. | consumer spending
for food. | c. | business spending for equipment. | d. | government spending to pay
employees. |
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2.
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Dividing GDP by the total population of a country results in that
country’s
a. | unemployment rate. | b. | GDP per capita. | c. | personal income per
capita. | d. | gross GDP rate. |
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3.
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Which of these items would be counted when measuring GDP?
a. | sheets of steel | b. | a fully assembled washing
machine | c. | rolls of raw fabric | d. | tomatoes still growing on the
vine |
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4.
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The interest rate banks charge their best business customers is the
a. | mortgage rate. | b. | T-bill rate. | c. | prime
rate. | d. | discount rate. |
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5.
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A recession often affects some groups of workers in related businesses. The drop
in related businesses is called
a. | the placebo effect. | b. | the ripple effect. | c. | the business
cycle. | d. | the halo effect. |
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6.
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If GDP growth slows for at least ____ quarter(s) in a calendar year, the economy
is probably in a recession.
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7.
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GDP measures a country’s economic output during
a. | one week. | b. | one year. | c. | five
years. | d. | one month. |
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8.
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Which of the following probably would result in a DECREASE in worker
productivity?
a. | A factory trains workers how to use shop equipment more
efficiently. | b. | The boss promises a bonus to all employees who come into work over the weekend to
finish an important project. | c. | A company pays for raises for top management by
laying off 60 percent of its employees. | d. | An office replaces its 10-year-old computers
with brand-new machines and the latest software. |
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9.
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Inflation
a. | always discourages economic growth. | b. | is most harmful to people living on fixed
incomes. | c. | tends to decrease wages. | d. | increases the buying power of the
dollar. |
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10.
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If you purchase a corporate or government bond, you are a(n)
a. | stockholder. | b. | creditor. | c. | entrepreneur. | d. | partner. |
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11.
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At the peak of the business cycle is
a. | prosperity. | b. | recovery. | c. | depression. | d. | recession. |
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12.
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Which of the following is an example of a capital project?
a. | A mid-size company restocks the supply cabinet with pencils and
markers. | b. | A small business purchases two new pickup trucks. | c. | A large corporation
gives all employees a 5 percent wage increase. | d. | A small office buys several boxes of paper for
the printer. |
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13.
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Which of the following is NOT a characteristic of a depression?
a. | GDP falls rapidly | b. | high demand for goods and
services | c. | a prolonged period of high unemployment | d. | business
failures |
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Matching
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a. | bond | g. | price index | b. | budget surplus | h. | productivity | c. | capital
project | i. | stock
| d. | depression | j. | recession | e. | inflation | k. | recovery | f. | personal
income | l. | retail
sales |
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14.
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Production output in relation to a unit of input, such as a worker.
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15.
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Represents debt for an organization.
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16.
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Government spends less than it takes in.
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17.
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A period in which demand begins to decrease, businesses lower production,
unemployment beings to rise, and GDP growth slows for 2 or more quarters of the calendar year.
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18.
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Spending by all businesses for items such as land, buildings, and
equipment.
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19.
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A number that compares prices in one year with some earlier base year and also
measures inflation.
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20.
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A phase in which unemployment begins to decrease, demand for goods and services
increases, and GDP begins to rise again.
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21.
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The sales of durable and nondurable goods bought by consumers.
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22.
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Represents ownership in a corporation.
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23.
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Salaries and wages as well as investment income and government payments to
inviduals.
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24.
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An increase in the general price level.
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25.
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A phase marked by a long period of high unemployment, weak consumer sales, and
business failures.
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True/False
Indicate whether the
sentence or statement is true or false.
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26.
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Economic growth refers to a steady increase in the production of goods and
services in an economic system.
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27.
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The less goods and services produced, the healthier an economy is considered to
be.
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28.
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During periods of deflation, prices drop so demand increases greatly.
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29.
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Mikayla is a 14-year-old student. She would be considered part of the labor
force in the United States.
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30.
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In the United States, all people over the age of 21 who do not have a full-time,
paying job are considered “unemployed.”
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31.
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An ability to produce more goods and services makes it possible to reduce the
number of hours in a workweek.
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32.
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The money for capital projects comes from three main sources: personal savings,
selling of stocks, and selling of bonds.
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33.
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Stanley receives a monthly social security check from the U.S. government. This
would be counted when measuring Stanley’s personal income.
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34.
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Business cycles are the recurring ups and downs of gross domestic
product.
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