Answers26-27 Ignite Economics-KY-EconomicsInflation and Stagflation (continued)

Inflation and Stagflation (continued) — Unit test Answers

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Stagflation occurs when high inflation combines with

A
high unemployment and a low level of production.
B
low unemployment and a high level of production.
C
a drop in buying power and a rise in workers’ wages.
D
a rise in buying power and a drop in workers’ wages.
2
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Economists use gross national product (GNP) to measure

A
economic output within a nation, regardless of ownership.
B
the output of foreign-owned businesses within a nation.
C
the output of a nation’s citizens, regardless of where they are.
D
any business activity taking place outside a country.
3

Which best describes what occurs in the product market?

A
the exchange of labor for capital
B
the exchange of goods and services for factors of production
C
the exchange of goods and services for money
D
the exchange of money for factors of production
4

Which best describes the nature of cause and effect in the context of the business cycle?

A
Consumers spend less, causing worker layoffs.
B
Demand falls, causing production to stay at its peak.
C
A recession begins, causing consumers to spend more.
D
Goods are overproduced, causing a surplus in jobs.
5

Jim lost his job in a car assembly factory to a robot and his skills will no longer be needed. Which terms can be used to describe Jim? Select two options.cyclically unemployeddomestically unemployedfrictionally unemployedstructurally unemployedstill employedunemployed

A
cyclically unemployed
B
domestically unemployed
C
frictionally unemployed
D
structurally unemployed
E
still employed
F
unemployed
6

The equation calculates an annual rate in economics.What rate does the equation calculate?

Question illustration
A
employment rate
B
inflation rate
C
demand rate
D
supply rate
7

The inflationary spiral explains the causes and effects of high inflation. The spiral usually begins with an increase in demand. What is the direct effect of this increase?

A
Producers raise prices to continue to make a profit.
B
The government prints more money, lowering the value of money.
C
Workers negotiate with employers to receive more money.
D
Consumers need higher wages to keep up with rising prices.
8

In macroeconomics, the economy can best be understood through the use of

A
money.
B
models.
C
pricing.
D
debates.
9

The circle graph shows the GDP in Germany for 2012.Which sector of Germany’s economy had the highest GDP?

Question illustration
A
agriculture
B
industry
C
services
D
technology
10

Hyperinflation can occur when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
companies raise prices to pass on costs to consumers.
D
the government prints a ton of money in order to pay off its debt.
11

The graph shows unemployment rates in the United States in recent years.Which statement is the most accurate explanation of the information on the graph?

Question illustration
A
Unemployment rates rise and fall in predictable patterns.
B
Unemployment will never again be as high as it was in 2010.
C
The United States suffered an economic downturn starting in 2009.
D
The United States does not have to worry about unemployment.
12

Why might buying a home during a recession be a good decision for some consumers? Choose three answers.Housing prices are down.It is easier to get a mortgage.Less demand means more options for buyers.Less demand means less competition with other buyers.Fewer houses are on the market.

A
Housing prices are down.
B
It is easier to get a mortgage.
C
Less demand means more options for buyers.
D
Less demand means less competition with other buyers.
E
Fewer houses are on the market.
13

Typically, low inflation is a sign of

A
a healthy economy because it results from a steady rise in demand.
B
a healthy economy because it results from a steady rise in supply.
C
a struggling economy because it results from a steady fall in demand.
D
a struggling economy because it results from a steady fall in supply.
14

Which statement best describes the circular flow model?

A
The model represents the movement of money and resources throughout the economy.
B
The model represents the interactions within sectors.
C
The model represents the flow of goods and services abroad.
D
The model represents the changing relationships between actors.
15

What are the signs of high inflation? Check all that apply.Production begins to fall.Production begins to rise.Interest rates decrease.Interest rates increase.Purchasing power falls.Fewer fixed rate bank loans.

A
Production begins to fall.
B
Production begins to rise.
C
Interest rates decrease.
D
Interest rates increase.
E
Purchasing power falls.
F
Fewer fixed rate bank loans.
16

When production is very high but demand is very low, it can lead to

A
a recession.
B
a recovery.
C
prosperity.
D
the peak.
17

Consumers having more money to purchase computers will most likely result in

A
a decrease in prices for computers and computer accessories.
B
an increase in prices for computers and computer accessories.
C
a decrease in prices for computers, but not computer accessories.
D
an increase in prices for computers, but not computer accessories.
18

What is one consequence of stagflation?

A
The economy drastically slows down as money loses its buying power.
B
Producers cannot keep up with consumer interest and raise their prices.
C
There are not enough workers to meet the rising level of production.
D
Demand is too high and people spend more money than they should.
19

Which event most likely explains renewed demand in a recovery period?

A
Consumers choose to save more and spend less.
B
Economic policy renews consumer confidence and demand.
C
Producers decrease prices to prompt demand and recovery.
D
Production decreases to prompt increased demand.
20

The circular flow model examines interactions between which two groups?

A
households and firms
B
households and consumers
C
firms and producers
D
firms and government

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