Transcript Economic Ups & Downs Activity

Economic Ups &
Downs Activity
Test Review
What is real gross domestic
product?
O Total market value of all final goods and
services produced within the borders of a
country during a specific year, adjusted for
price changes.
Why is it important adjust
GDP for price changes when
measuring the economy?
O Production, consumption & income are
ultimately determined by levels of real
output not prices
Desribe the three types of
unemployment
O Frictional
O Structural
O Cyclical
Why is unemployment
considered undesirable?
O It lower production, income & consumption
levels
Why are inflation and
deflation undesirable?
O Both arbitrarily redistribute income. They
affects different people in different ways,
depending largely on how difficult or easy it
is for the dollar level of their income to
change as price level changes
What happens to
unemployment during
recessions?
O It increases
What generally happens to
prices as the economy
approaches a peak?
O They rise
What are two types of fiscal
policy?
O Automatic stabilizers
O Discretionary fiscal policy
What is Fiscal Policy?
O Changes in the overall level of government
spending and/or taxes designed to lower
unemployment and inflation
Why does the federal
government engage in fiscal
policy?
O To reduce unemployment and inflation, and
encourage economic growth
What are the US economic
goals?
O Full employment
O Price stability
O Economic Growth