WGU D089 EXAM PRINCIPLES OF ECONOMICS
EXAM | ALL QUESTIONS AND CORRECT
ANSWERS | LATEST VERSION | ALREADY
GRADED A+
What attributes of a good or service are needed to be included in the GDP?
------CORRECT ANSWER---------------Must be a final good made within a
particular year, traded in a legal market, and made within the geographic
boundaries of the country.
What is the difference between nominal value and real value? ------
CORRECT ANSWER---------------Nominal value is the value in current
dollars where the real value is the nominal value after adjusting for changes
in inflation.
What is the business cycle? ------CORRECT ANSWER---------------The
pattern of expansion and contraction of GDP.
What occurs when the GDP declines significantly? ------CORRECT
ANSWER---------------A recession
Why can GDP alone be a misleading indicator of a nations's wealth? ------
CORRECT ANSWER---------------Countries with large populations often
have large GDPs, a better measure is GDP per capita.
What is an approximate indicator of a society's standard of living? ------
CORRECT ANSWER---------------GDP
,What two groups can the adult population be divided into? ------CORRECT
ANSWER---------------Those in the labor force and those out of the labor
force?
How can the labor force be divided? ------CORRECT ANSWER---------------
Employed and unemployed
What are the requirements of a person to be counted as unemployed and a
part of the work force? ------CORRECT ANSWER---------------The person
must be willing and able to work and actively looking for work to be
counted, otherwise a person without a job is counted as out of the labor
force
How do economists define the unemployment rate? ------CORRECT
ANSWER---------------The number of unemployed persons divided by the
number of persons in the labor force
When does frictional unemployment occur? ------CORRECT ANSWER-------
--------When people either choose to change jobs, such as when a person
moves to a new city, or is a new college graduate.
When does structural unemployment occur? ------CORRECT ANSWER-----
----------When demand shifts permanently away from a certain type of job
skill, such as when jobs are outsourced or replaced by technology.
,When does cyclical unemployment occur? ------CORRECT ANSWER--------
-------When there is a downturn in the economy, and it rises and falls with
the business cycle
How does the unemployment rate react to a recession? ------CORRECT
ANSWER---------------It rises
When the economy is strong, in what range is the unemployment rate? -----
-CORRECT ANSWER---------------Around 4% to 6%
Is the unemployment rate ever zero? ------CORRECT ANSWER---------------
No
How do economists measure the price level? ------CORRECT ANSWER----
-----------by using a basket of goods and services and calculating how the
total cost of buying that basket of goods will increase over time.
What is the most commonly cited measure of inflation? ------CORRECT
ANSWER---------------Consumer Price Index (CPI)
What two problems will always exist by measuring price levels with a fixed
basket of goods? ------CORRECT ANSWER---------------Substitution bias
and quality and new goods bias
What has the annual inflation rate in the U.S. Economy been over the past
two decades? ------CORRECT ANSWER---------------Around 2% to 4%
, Why is inflation bad for lenders? ------CORRECT ANSWER---------------It
reduces the value of the money paid back to the lenders
When is a payment indexed? ------CORRECT ANSWER---------------If it is
automatically adjusted for inflation.
What are wage contracts with cost of living adjustments (COLA) and loan
agreements like Adjustable rate mortgages (ARMs) an example of? ------
CORRECT ANSWER---------------Price indexing in the private sector
What are tax brackets and social security payments an example of? ------
CORRECT ANSWER---------------Price indexing in the public sector
What does aggregate demand (AD) refer to? ------CORRECT ANSWER-----
----------The amount of total spending on domestic goods and services in an
economy
In what direction do all aggregate demand (AD) curves slope? ------
CORRECT ANSWER---------------Downward from left to right
How is the wealth effect described? ------CORRECT ANSWER---------------
As the price level increases, the buying power of money is depleted to
some extent by inflation
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