Chapter 12 Test Review
1. How to economists monitor important economic data?
2. What does NIPA stand for and what is it?
3. The most important of the measures in NIPA is __________________.
4. GDP stands for?
5. GDP is the ______________________ of all _______________ goods and services
_______________ within a _______________ borders in a given ________________.
6. Describe final goods and services and compare them to intermediate goods.
7. What are the two ways to calculate GDP? Describe them
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8. Explain the difference between durable and nondurable goods.
9. The ___________ ___________ Model helps ________________ ways to calculate ________.
10. Draw a circular flow model and label these terms: Households,
businesses(firms), income, sales, resources, goods and services, Resource
Market, Product Market.
11. GDP measured in current prices is ___________________.
12. GDP expressed in constant, or unchanging prices is ___________________.
13. What distortion can occur when using just current prices?
14. What are the four limitations of GDP? Explain them and provide and
example for each.
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15. While GDP is not perfect when calculated _________________ over time it helps
reveal economic ________________ ____________.
16. GNP stands for? Explain the concept.
17. How much people actually have to spend after they pay their taxes is called
_______________________ personal income.
18. Who determines and tracks business cycles? Describe the organization.
19. Draw a business cycle and label these terms: expansion, peak, contraction,
trough, the Y axis, the X axis, recovery, and prosperity.
20. Expansion is the part of the cycle when the economy is __________________.
21. The end of the expansion period is the turning point called the ______________.
22. During this turning point these are the warning signs of the decline to come.
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23. When the economy is slowing, we are in what phase of the business cycle?
24. The lowest point of the business cycle is the_________________. This is a
_____________ point.
25. Explain the difference between recovery and prosperity.
26. Describe the difference between the official NBER definition of a recession
and the layman’s definition.
27. Why does NBER try not to use the term depression when describing
business cycles?
28. T or F. Business cycles affect everyone in the economy the exact same way.
29. T or F. There is one single theory about what causes a business cycle.
30. Econometrics is a difficult field of economics that tries to _______________ or
predict what will happen in the business cycle.
31. What are leading indicators?
32. The Great Depression was the ____________ and _________________________
economic downturn in the ________________ of the industrialized world.
33. What large world event is given credit for helping end the Great Depression?
34. T or F. After World War II the period of prosperity only lasted until the early
1960s.
35. What was Paul Volcker trying to “whip” when he raised interest rates and
started the recession named after him?
36. The Volcker Recession was the _________________ recession since the
_______________ __________________.
37. During the Great Recession what burst that caused the downturn?
38. _______________ lending was to blame for a lot of the troubles.
39. Is the economic outlook for 2015 positive or negative?
40. List and describe two of the problems facing the U.S. economy in the future.
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41. Economic growth is measured in the ____________ term and the _____________
term.
42. Explain the difference between these two measurements.
43. What are the three factors of economic growth?
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44. What drives economic growth?
45. Describe an incentive.
46. Describe the difference between formal and informal institutions.
47. Define living standard:
48. Describe the difference in living standards between wealthy and developing
countries.
49. List two potential benefits of economic growth and two potential harmful
side effects of economic growth.
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50. Opinion. Do you think the benefits of growth outweigh the costs?