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Chapter 7

Chapter 7. Economic growth is best defined as an increase in: . either or. Which best measures improvements in the standard of living?. growth of real GDP. For comparing changes in a nation’s power, the most meaningful measure of economic growth would be:. changes in total.

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Chapter 7

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  1. Chapter 7

  2. Economic growth is best defined as an increase in:  • either or .

  3. Which best measures improvements in the standard of living? • growth of real GDP .

  4. For comparing changes in a nation’s power, the most meaningful measure of economic growth would be: • changes in total .

  5. The number of years required for real GDP to double can be found by: • dividing by the annual .

  6. About ________ of U.S. economic growth comes from improved productivity (as opposed to added inputs).  • two-thirds.

  7. The phase of the business cycle in which real GDP declines is called:  • a / .

  8. Market economies have been characterized by:  • occasional instability of and .

  9. A recession is a period in which:  • falls (2 consecutive quarters).

  10. In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?  • .

  11. The sectors in which output is likely to be most strongly affected by the business cycle are: • and goods.

  12. The production of durable goods varies more than the production of nondurable goods because:  • durables purchases are .

  13. The labor force: • # + # .

  14. unemployment rate:  # . #Labor Force

  15. To be officially unemployed a person must:  • be in the .

  16. Part-time workers are counted as: fully employed • therefore the official unemployment rate maythe level of unemployment.

  17. If members of the underground economy are presently counted as part of the unemployed when in fact they are employed, the official unemployment rate is: • .

  18. The natural rate of unemployment: • that rate of unemployment occurring when the economy is at its .

  19. If the unemployment rate is 7 percent and the natural rate of unemployment is 5 percent, then the:  cyclical unemployment rate is?

  20. Discouraged workers:  • may cause the official unemployment rate to the amount of unemployment.

  21. Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:  .

  22. The type of unemployment associated with recessions is called: • .

  23. The GDP gap measures the difference between: • GDP and GDP.

  24. Okun's law: • for every 1% increase in the , a country's GDP will be roughly an additional 2% lower than its .

  25. In the United States, business cycles have occurred against a backdrop of a long-run trend of:  .

  26. Inflation means:  • prices in the are rising, although some particular prices may be .

  27. The rate of inflation can be found by subtracting:  • last year's from this year's price index and the difference by last year's price index.

  28. Demand-pull inflation:  • occurs when exceeds the economy's ability to provide at the existing .

  29. Cost-push inflation: • may be caused by a negative , i.e. oil and gas prices sharply rising

  30. Real income is found by:  • dividing by the (in hundredths).

  31. real income: • income – price level increase (inflation)

  32. Inflation: • arbitrarily redistributes and .

  33. Who can best adapt to unanticipated inflation? • an owner of a . • Why?

  34. Cost-push inflation:  • reduces .

  35. During hyperinflation: • people tend to hold rather than .

  36. The price index in the base year is • .

  37. If your wages triple at the same time as the consumer price index goes from 100 to 400, you real wage • .

  38. If the cost of a market basket of goods increases from $100 in year 1 to $110 in year 2, the CPI in year 2 equals if year 1 is the base year. • .

  39. Consumer Price Index (CPI): • the most common of the price level • measures the price of a typical of goods • does measure the cost of goods and services in an economy

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