16. Gross domestic product isn\'t a perfect measure of economic well-being becau

Question

16. Gross domestic product isn't a perfect measure of economic well-being because: (a) it does not take into account the value of things that aren't priced in markets (b) It does not take into account government spending in an economy (c) It does not take into account the unemployment rate ld) It does not take into account the inflation rate 17. The inflation rate helps us measure: (a) How much we spend on net exports (b) How new products introduced into our economy effects our well-being (c) Price stability d) The total amount consumers spend on goods and services in a year 18. Hyperinfiation is destabilizing to an economy because: (a) it helps savers build up too much wealth b) It promotes too much employment creation (c) Wage growth is very strong during hyperinflation (d) Savings and purchasing power are eroded during hyperinflation 19. The "natural rate" of unemployment refers to: (a) The unemployment rate due to movement between jobs and structural changes in the underlying job market. (b) The unemployment rate caused by the business cycle, including recessions and expansions (c) The unemployment rate of marginally attached workers (d) The size of the labor force 20. Price deflation is: (a) declining price levels (b) accelerating price levels (c) related to periods of great economic growth (d) related to periods of extreme price level growth 21. Indentured servants were widespread in British North America because (a) Indentured servitude was outlawed in the other British colonies (b) The contractual wages demanded by indentured servants were too high for the work in the other colonies (c) Indentured servants were not well suited to working in tropical areas ld) The contractual wages in indentured servants' contracts were not negotiable

Explanation / Answer

16. The correct answer is: a)

Reason: GDP doesn't include the goods that are not priced in the market like household work, services by family members, etc.

17. The correct answer is: c)

Reason: Inflation is a good measure of price stability. The more volatile the inflation, the lower is the price stability.

18. The correct answer is: d)

Reason: During hyperinflation, savings depreciate fastly as the worth of the savings errode very quickly.

19. The correct answer is: a)

Reason: The natural rate of unemployment can also be considered as the unemployment rate at the full employment level which comprises of the unemployment due to structural changes in the job market.

20. The correct answer is: a)

Reason: By definition, price deflation refers to declining prices in the market.

21. The correct answer is: a)

Reason: This goes by the historical evidence of the indentured servant's agreement.

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