Name __________________________
Quiz Date / due date ______________
Measuring Economic Performance
Principles and Practices of Economics
Chapter 12 Study Guide
Directions: Referring to your text, read pages 299-326, and answer the following questions.
Use this as a reference when studying for the chapter quiz, and be prepared to turn it in for
credit prior to taking the quiz.
Section 1:
1. What did the Great Depression convince economists to do? _______________________
_______________________________________________________________________
2. A system that collect statistics on production, income, investment, and savings is known
as _________________ _____________________ ___________________.
3. The dollar value of all final goods and services produced within a country’s border in a
given year is known as GDP or ________________ ____________ _____________
4. The goods that are in the form sold to consumers are known as _______________ goods.
5. Goods used in the production of final goods are known as ___________________ goods.
(These are not counted in the GDP.)
6. Goods that last for a relatively long period of time are known as ______________ goods.
7. Consumable goods that last for a short period of time are ____________________ goods.
8. What are the government’s two main approaches to figuring the GDP?
a. _______________________________
b. _______________________________
9. There are many limitations of the GDP, and even those the measure itself may be
imperfect, when calculated consistently over time, it helps reveal what?
__________________________________
10. As opposed to the GDP which is the dollar value of goods and services produced within
a country’s borders, the GNP or Gross National Product is the annual income earned by
all U.S. owned ____________________ and U.S. residents. (This means that it would
include income earned outside the U.S. by U.S. firms and citizens.)
11. The loss of the value of capital equipment due to wear and tear is known as
____________________________.
12. The supply curve for the whole economy is known as _____________________ supply,
which means it is the total amount of goods and services in the economy at all price
levels.
13. The amount of goods and services in the economy that will be purchased at all possible
price levels is known as the ______________________ __________________________.
Section 2:
14. A period of macroeconomic expansion followed by a period of contraction is known as a
___________________ ________________________.
15. Describe what the economy is like during the expansion phase.
16. The height of economic expansion is known as its ________________________.
17. An economic decline, marked by falling real GDP is a period of ___________________.
18. The lowest point in an economic contraction is known as the _____________________.
19. If real GDP falls for two consecutive quarters (6 months or more) what is the state of the
economy? _________________________
20. When there is a decline in the GDP, and a raise in the general price level, the economic
situation is known as _________________________.
21. Identify the four main economic variables that affect the business cycle.
a. __________________________________________
b. __________________________________________
c. __________________________________________
d. __________________________________________
22. How do consumers generally respond when interest rates rise?
23. What do companies generally do when interest rates are low?
24. What are consumers likely to do if they fear that the economy is weakening?
25. Give two examples of possible external shocks that would affect the economy.
a. ___________________________________________
b. ___________________________________________
26. A set of key economic variables that economists use to predict a new phase of a business
cycle are known as _____________________ ______________________.
27. Identify two examples of leading economic indicators.
a. ___________________________________________
b. ___________________________________________
28. John Maynard Keynes was a well known economics in the time of the Great Depression.
He said that what needed to occur to improve the state of the economy? __________
_________________________________
Section 3:
29. What is the basic measure of a nation’s economic growth? ______________________
30. When population growth is taken into account, what is the term for this measure of the
GDP? _________________________________________
31. If savings and investments rise, what becomes available to business firms?
______________________________
32. When the value of goods a country imports is higher than the value of what it exports, the
situation is known as a _____________________ __________________.
33. What are the four main causes for Technological Progress?
a. ____________________________________________________
b. ____________________________________________________
c. ____________________________________________________
d. ____________________________________________________
34. Carefully read the chapter summary in page 326.
35. Answer the Key Terms section on page 326 using the spaces below for responses.
1. _____________________________________________
2. _____________________________________________
3. _____________________________________________
4. _____________________________________________
5. _____________________________________________
6. _____________________________________________