Economic Indicators & Business Cycle unit test

A test on this unit alone, marked as a percentage and a letter grade — for the test your class is actually sitting, rather than for May. Answer everything, then submit once: seeing the answer to question 3 before attempting question 4 makes the final percentage meaningless.

Paper 1 Paper 2 Paper 3

Each paper is built from this unit’s 55 terms and is the same for everyone, so a teacher can assign “Unit 2, Paper 1” and every student sits the identical test. Multiple choice is marked objectively; the written sections you mark yourself against the model answer and rubric.

Suggested time 32 min 29 points0/17 attempted

Recessionary gap

Labor force participation rate

Two different denominators

Inflation

Non-market production

Nominal GDP

Why a falling unemployment rate can be bad news

Deflation vs disinflation

Expenditure approach to GDP

Identifying the base year from a table

Inflationary gap

Why output can exceed potential

Short answer 1. Define or explain: Leading indicators

3 pts

Short answer 2. Define or explain: Real GDP

3 pts

Short answer 3. Define or explain: Excluded from GDP

3 pts

Short answer 4. Define or explain: Discouraged worker

3 pts

Free response

5 pts

SHORT QUESTION. The economy of Foxhound is in short-run equilibrium with the following data: Labor force 15,000,000 Number of people not working but looking for work 900,000 Number of people who are retired 200,000 Number of people not working and not looking 100,000 Natural rate of unemployment 3% Actual inflation rate 2%

A. How many people are employed in Foxhound?

B. Calculate the actual unemployment rate in Foxhound. Show your work.

C. Draw (describe) a correctly labeled graph of the short-run and long-run Phillips curves for Foxhound, labeling the short-run equilibrium point as X and plotting the relevant numerical values.

D. If some individuals who are counted as employed in Foxhound retire, will the unemployment rate increase, decrease, or remain the same? Explain.