Name: ___________________________________________________ Chapter 3 Review Packet Worth _____/30 points Date: __________ Class Period: ________ Instructions: Below you will find key information you should understand and be able to apply in a testing situation. Any activity, textbook reading, class discussion, and class notes are all fair game for the test. You will work all class period, independently on this review packet. It is your responsibility to go online to our class website and check your answers. There is an electronic version of this review available online if you prefer responding to the questions in that manner. Objectives: • Identify the four types of economic shifts that the United States has experienced. • Describe what is shown by GDP, the unemployment rate, rate of inflation, and national debt. • Describe the four stages of the business cycle. • Explain how individuals and government influence the economy. VOCABULARY – You should be able to define (more than just the definition) and use the following vocabulary terms…. 1. Gross Domestic Product (GDP) 2. Standard of Living 3. Inflation 4. Deflation 5. Budget Deficit 6. National Debt 7. Budget Surplus 8. Business Cycle 9. Prosperity 10. Recession 11. Depression 12. Recovery REINFORCEMENT QUESTIONS – Respond to each of the questions below, in order to demonstrate your understanding of the concept. 13. Explain the four types of economic shifts the United States has experienced over the years. Note: this is not the business cycle – it is from your reading of the chapter. 14. What is the purpose of the GDP? 15. Describe what the unemployment rate represents. 16. Define rate of inflation and national debt. Then explain how the two concepts are related. 17. Estimate the current level of national debt for the United States. Explain why this number is continuing to increase. 18. What is the main source of income for the government? a. List three areas of the economy where this income is used. 19. Draw a sample of the business cycle. Be sure to label each section. 20. Yes or No – Is it possible to jump from stage to stage on the business cycle? 21. Critical Thinking Would cars made in this country by a foreign-­‐owned company be included in GDP? Why or why not? 22. Critical Thinking Which would be included in the GDP: babysitting at home or working at a day-­‐
care center? 23. Critical Thinking Why is inflation especially difficult for individuals who are retired? 24. Explain why the standard of living is higher in the United States than in many other countries. 25. Critical Thinking Suppose you go to a store to buy a soda but notice the price is 20 cents higher than it was last week. Other prices are unchanged. Is this an example of inflation, deflation, or neither? Why or why not? 26. Explain the ripple effect.