- A.Cyclical unemployment occurs during the contraction phase of the business cycle, and structural
unemployment takes place as a result of technology creating a lack of knowledge or skills. - C.Consumption + Investment + Government + Exports = GDP expenditures.
- A.Real GDP is an inflation-adjusted measurement of all final goods and services produced; nominal GDP takes
current-year prices that are not adjusted for inflation. - D. Price indexes measure the price level (inflation).
- B.GDP components include consumption, investment, and government purchases. These are three of the four
parts of GDP under the expenditures approach. Net exports make up the fourth part of the expenditures approach. - A.An increase in the price level and an increase in the real GDP would be the result of an increase in labor
productivity. When more people have jobs, the economy is more productive and the price level rises. - A.The CPI measures price changes over time for a particular group (market basket) of goods and services. The CPI
is calculated using a base year that examines relative prices. - A.When more people have jobs, consumption increases because purchasing power increases.
- C.Two consecutive quarters with declining GDP usually indicates a recession. When the economy is
experiencing a fall in output over an extended period of time, unemployment is growing and total spending is
decreasing.
Part II: Macroeconomics