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30 terms

Econ 111 Exam 2

STUDY
PLAY
A particularly severe recession is called a:
Depression
The Great Depression:
was a period of low production and high unemployment.
To say someone has a comparative advantage in the writing of an economics books means:
he has a low opportunity cost for writing an economics book.
A key indicator of the hardship experienced during the Great Depression is the:
high rate of unemployment.
If the borrower and lender agree to a loan at 8% when the inflation rate is 3%, then the 8% is the____interest rates and 5% is the____interest rate.
nominal/real
____is/are the market value of all final goods and services produced within a country during a given period of time.
GDP
If the unemployment rate increases from 4% to 10%, then the economy is most likely in a(n):
recession
The real interest rate equals the:
nominal interest rate minus the inflation rate.
Inflation exists when:
prices on average are higher.
It is difficult to engage in long-term financial planning when inflation is:
high and erratic
If the market interest rate is 10% and the inflation rate is 3%, then the real interest rate is:
7%
The unemployment rate is the:
percentage of the labor force that is out of work.
Unexpectedly high inflation____borrowers and____lenders.
helps/hurts
Frictional unemployment may be economically beneficial if:
it leads to a better match between worker and job.
Real GDP is GDP adjusted for:
inflation
Unemployment typically____ the onset of a recession.
increases after
Economic activity moves from a peak into a period of____until it reaches a____and then into a period of____.
recession/trough/expansion or recovery.
If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 10% and inflation turns out to be 7% over the life of the loan, then the borrower____and the lender____.
loses/gains
For a given nominal interest rate, an unexpectedly high inflation rate____the real interest rate.
decreases.
Hector looked for a job for five weeks after finishing college. He turned down several jobs that didn't use his skills, but now has a job requiring the expertise he gained in college. This is an example of:
Frictional Unemployment
The unemployment rate in the United States:
never falls to zero.
The difference between Nominal GDP and Real GDP is:
Real GDP is valued in constant prices (adjusted to inflation).
In reference to short-term economic fluctuations, the "trough" refers to:
the low point of economic activity prior to a recovery.
If the real interest rate is 3% and the inflation rate is 7%, then the nominal interest rate equals:
10%.
In reference to short-term economic fluctuations, the "peak" refers to:
the high point of economic activity prior to a downturn.
Goods and services that are consumed by the ultimate user are called___goods and services.
value added
The value of unpaid childcare services provided by a stay-at-home dad___included in GDP and the value of daycare services purchased from a licensed childcare provider____included in GDP.
is not/is
Typically unemployment____during a recession and____during an expansion.
rises/falls
Unexpectedly low inflation____borrowers and____lenders.
hurts/helps
A measure of GDP in which quantities produced are valued at current-year pries is called:
real GDP.