Chapter 12, 13, and 14 Review on GDP, Business Cycle, Unemployment, Inflation, and Taxes.

Chapter 12, 13, and 14

Review on GDP, Business Cycle, Unemployment, Inflation, and Taxes

Question 1

What do Social Security taxes pay for?

a. benefits to federal workers and military personnel

b. benefits to those who are unemployed

c. transportation and training expenses for low-income people

d. benefits to older citizens, surviving family members of wage earners, and people with certain disabilities

Question 1

What do Social Security taxes pay for?

a. benefits to federal workers and military personnel

b. benefits to those who are unemployed

c. transportation and training expenses for low-income people

d. benefits to older citizens, surviving family members of wage earners, and people with certain disabilities

Question 2

A recession is

(a) a period of steady economic growth.

(b) a prolonged economic expansion.

(c) an especially long or severe economic contraction.

(d) a prolonged economic contraction.

Question 2

A recession is

(a) a period of steady economic growth.

(b) a prolonged economic expansion.

(c) an especially long or severe economic contraction.

(d) a prolonged economic contraction.

Question 3

When the economy is working properly, what is the unemployment rate?

A. 0 to 3 percent B. 8 to 10 percent C. 4 to 6 percent D. 10 to 12 percent

Question 3

When the economy is working properly, what is the unemployment rate?

A. 0 to 3 percent B. 8 to 10 percent C. 4 to 6 percent D. 10 to 12 percent

Question 4

An example of a durable good would be A. a used car. B. a box of cereal. C. a paperback book. D. a pack of baseball cards.

Question 4

An example of a durable good would be A. a used car. B. a box of cereal. C. a paperback book. D. a pack of baseball cards.

Question 5

Which of the following is an example of a final good or service?

A. Wheat a bakery purchases to make bread B. Coffee beans a coffee shop purchases to make coffee C. Lumber purchased by a construction company to use

in building houses D. A cake purchased from a bakery for a wedding

Question 5

Which of the following is an example of a final good or service?

A. Wheat a bakery purchases to make bread B. Coffee beans a coffee shop purchases to make coffee C. Lumber purchased by a construction company to use

in building houses D. A cake purchased from a bakery for a wedding

Question 6

GDP expressed in constant, or unchanging, prices is called

A. real GDP. B. nominal GDP. C. price level. D. net national product.

Question 6

GDP expressed in constant, or unchanging, prices is called

A. real GDP. B. nominal GDP. C. price level. D. net national product.

Question 7

If Bob loses his job at the GM plant because car manufacturing is slow due to a downturn in the

economy, you can conclude that he is

A. cyclically unemployed. B. structurally unemployed. C. seasonally unemployed. D. frictionally unemployed.

Question 7

If Bob loses his job at the GM plant because car manufacturing is slow due to a downturn in the

economy, you can conclude that he is

A. cyclically unemployed. B. structurally unemployed. C. seasonally unemployed. D. frictionally unemployed.

Question 8

How is the federal income tax a progressive tax?

(a) The higher the income a person has, the higher the percentage that person pays as tax.

(b) A person with a higher income pays more money in taxes, although the percentage he or she pays as tax is less.

(c) Two married people who file their taxes together will pay more taxes than a single person will.

(d) Children pay no taxes, regardless of whether they earn a large income.

Question 8

How is the federal income tax a progressive tax?

(a) The higher the income a person has, the higher the percentage that person pays as tax.

(b) A person with a higher income pays more money in taxes, although the percentage he or she pays as tax is less.

(c) Two married people who file their taxes together will pay more taxes than a single person will.

(d) Children pay no taxes, regardless of whether they earn a large income.

Question 9

The lowest point in an economic contraction is called

A. a peak. B. a recession. C. a trough. D. a depression.

Question 9

The lowest point in an economic contraction is called

A. a peak. B. a recession. C. a trough. D. a depression.

Question 10

How does the Bureau of Labor Statistics determine how the market basket should change over time?

A. by evaluating the census B. by conducting a Consumer Expenditure Survey C. by calculating the inflation rate D. by computing the Consumer Price Index

Question 10

How does the Bureau of Labor Statistics determine how the market basket should change over time?

A. by evaluating the census B. by conducting a Consumer Expenditure Survey C. by calculating the inflation rate D. by computing the Consumer Price Index

Question 11

An example of a nondurable good is

A. a new car. B. a paperback book. C. a used car. D. a washing machine.

Question 11

An example of a nondurable good is

A. a new car. B. a paperback book. C. a used car. D. a washing machine.

Question 12

What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?

A. Social Security and Medicaid B. Social Security and Medicare C. Medicare and Medicaid D. Medicaid and Supplemental Security Income

Question 12

What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?

A. Social Security and Medicaid B. Social Security and Medicare C. Medicare and Medicaid D. Medicaid and Supplemental Security Income

Question 13

Which is an example of discretionary spending?

A. Social Security B. Medicaid C. Medicare D. Education

Question 13

Which is an example of discretionary spending?

A. Social Security B. Medicaid C. Medicare D. Education

Question 14

What is an entitlement?

A. a social welfare program providing benefits to people who meet certain eligibility requirements

B. a social welfare program paying bills for government spending such as supplies and utilities

C. a social welfare program spending funds over which legislators have direct control

D. a social welfare program providing payments that the government receives for certain services

Question 14

What is an entitlement?

A. a social welfare program providing benefits to people who meet certain eligibility requirements

B. a social welfare program paying bills for government spending such as supplies and utilities

C. a social welfare program spending funds over which legislators have direct control

D. a social welfare program providing payments that the government receives for certain services

Question 15

In a typical business cycle, what stage immediately follows a peak?

A. contraction B. trough C. expansion D. growth

Question 15

In a typical business cycle, what stage immediately follows a peak?

A. contraction B. trough C. expansion D. growth

Question 16

Which term matches this definition:

A general increase in prices

Question 16

Which term matches this definition:

A general increase in prices

Inflation

Question 17

Which term matches this definition:

Taking tax payments out of an employee’s pay before he or she receives it

Question 17

Which term matches this definition:

Taking tax payments out of an employee’s pay before he or she receives it

Withholding

Question 18

Which term matches this definition:

Spending on certain programs that is required by existing law

Question 18

Which term matches this definition:

Spending on certain programs that is required by existing law

Mandatory Spending