3) Whics of the tollening wold ot les tis yeats GU a) the pait you puechaset whe

Question

3) Whics of the tollening wold ot les tis yeats GU a) the pait you puechaset when gaintiog your b) the new car your yareats puechuases and vetoou as s bitay c) a Catewey computex puschasnd by the US.ven d) the value of a weed car you puchases, an its sc 4) When the consumer price index. ises, the tyical family a) has to spend more dollars to maiotain the sae danderd of living b) can spend fewer dollars to soaintain the same standard of ii c) finds that its standard of living is sot affected d) can offset te effects of rnising prices by saving mone Economists use the term "business cycle" to sefer to a) the gowth of small businesses into major corporations b) changes in products that occur from improved technology c) fluctuations in the level of real output and employmet d) periods of increases and decreases in the rate of inflation. 5) 6) If the economy were at its potential output level, which of the folloving is not tue a) The actual unemployment rate would equal the natural rate b) There would be some cyclical unemployment c) There would be some frictional unemployment. d) There would be some structural unemployment. T) Which of the following would a Keynesian economist be most likely to stress? a) Supply creates its own demand. b) Businesses will not produce goods and services if they do not think people will buy them c) You cannot spend your way out of a recession. d) When the unemployment rate is high, wage rates will fall.

Explanation / Answer

Ans 3.) d. The value of an old car you purchased.

It will not be considered in this years GDP because this is an old car and it was already considered in the year it was manufactured. GDP is the gross economic value of all the outputs created in an economic year.

Ans 4) a. family will spend more dollars to maintain same standard of living.

Rise in CPI means inflation has increased and things have become costlier thus the famile will have to spend more to maintain same standard of living.

Ans 5) d. periods of increase and decrease in the rate of inflation.

Business cycle is the period of natural growth and and fall over time. Inflation and deflation corresponds to that.

Ans 6) b. there would be some cyclical unemployment.

Even when the economy is at its potential output level there is some form of natural unemployment. Both structural and frictional unemplyment are a part of natural rate of unemployment whereas cyclical unemployment is not.

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