Question 1

Disinflation refers to a situation in which prices continue to rise, but not at the rate they were rising previously.

Accepted Answer

Disinflation is a decrease in the rate of inflation, so prices are still rising but at a slower rate than before.

Question 2

GDP figures do not include the value of illegal activities.

Accepted Answer

GDP only counts legal economic activities, so illegal activities such as drug trafficking or black market sales are not included in GDP calculations.

Question 3

Structural unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

Accepted Answer

This is the correct definition of structural unemployment.

Question 4

The producer price index measures what is happening to prices at the wholesale level.

Accepted Answer

The producer price index (PPI) measures the average change over time in prices received by domestic producers for their output at the wholesale level.

Question 5

Productivity of workers in the U.S. is helped by the use of better machinery.

Accepted Answer

The use of better machinery can increase productivity by automating tasks that would otherwise require more time and effort from workers.

Question 6

An increase in productivity means that a worker is now able to produce more goods and services in the same amount of time.

Accepted Answer

An increase in productivity means that a worker is able to produce more output, such as goods or services, with the same amount of resources or in the same amount of time.

Question 7

Deflation means prices are declining and is an indication that economic conditions are deteriorating.

Accepted Answer

Deflation is often a sign of weakening demand for goods and services, which can ultimately lead to decreased economic activity and employment opportunities. Additionally, deflation can cause a cycle of falling prices and wages, leading to a potentially prolonged period of economic recession.

Question 8

Inflation refers to the persistent rise in the purchasing power of money.

Accepted Answer

Inflation refers to the persistent rise in the general price level of goods and services, which reduces the purchasing power of money. Therefore, the statement is false.

Question 9

The CPI measures the pace of inflation or deflation.

Accepted Answer

The CPI, or Consumer Price Index, tracks changes in the prices of goods and services over time and is used to measure inflation or deflation.

Question 10

The higher the measurement of productivity, the higher the likely costs of production.

Accepted Answer

Higher productivity can lead to lower costs of production due to efficiencies gained, such as increased output per input.

Question 11

Inflation refers to a general rise in the prices of goods and services over time.

Accepted Answer

Inflation refers to a general rise in the prices of goods and services over time.

Question 12

Any output produced by U.S. firms is included in the value of U.S. GDP, even if the output was produced in a foreign country.

Accepted Answer

The answer of Any output produced by U.S. firms is...

Question 13

The measurement of total sales volume at all stages of production is called the gross domestic product (GDP).

Accepted Answer

The answer of The measurement of total sales volume at...

Question 14

Frictional unemployment occurs because the economy is experiencing a recession.

Accepted Answer

Frictional unemployment is caused by workers changing jobs or entering the workforce for the first time, not by a recession. The correct type of unemployment that occurs during a recession is called cyclical unemployment.

Question 15

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

Accepted Answer

The consumer price index (CPI) measures what is happening to prices at the consumer level, not the wholesale level.

Question 16

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

Accepted Answer

The CPI (Consumer Price Index) is used as a measure of inflation and is often used to adjust wages, tax brackets, interest rates, and government benefits to keep up with changes in the cost of living. Therefore, some of these factors are based on the CPI.

Question 17

To be classified as unemployed, a person must be at least 16 years old and trying to find a job within the past four weeks.

Accepted Answer

This is a true statement according to the definition of unemployment used by the Bureau of Labor Statistics.

Question 18

As productivity increases, the cost of producing goods and services is likely to fall.

Accepted Answer

This is because increased productivity allows for more output to be produced with the same amount of resources, thereby reducing the overall cost per unit.

Question 19

The CPI is based on the prices of a carefully selected market basket of goods, all of which consumers can purchase at a supermarket.

Accepted Answer

The market basket of goods used to calculate the CPI includes a variety of items that consumers typically purchase, but not all of them can be purchased at a supermarket. The basket includes items such as housing, transportation, medical care, and education, which are not typically found at a supermarket.

Question 20

Core inflation figures omit healthcare prices, but not energy prices.

Accepted Answer

The answer of Core inflation figures omit healthcare prices, but...

Quiz 2: Understanding Economics and How It Affects Business

Disinflation refers to a situation in which prices continue to rise, but not at the rate they were rising previously.

GDP figures do not include the value of illegal activities.

Structural unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

The producer price index measures what is happening to prices at the wholesale level.

Productivity of workers in the U.S. is helped by the use of better machinery.

An increase in productivity means that a worker is now able to produce more goods and services in the same amount of time.

Deflation means prices are declining and is an indication that economic conditions are deteriorating.

Inflation refers to the persistent rise in the purchasing power of money.

The CPI measures the pace of inflation or deflation.

The higher the measurement of productivity, the higher the likely costs of production.

Inflation refers to a general rise in the prices of goods and services over time.

Any output produced by U.S. firms is included in the value of U.S. GDP, even if the output was produced in a foreign country.

The measurement of total sales volume at all stages of production is called the gross domestic product (GDP).

Frictional unemployment occurs because the economy is experiencing a recession.

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

To be classified as unemployed, a person must be at least 16 years old and trying to find a job within the past four weeks.

As productivity increases, the cost of producing goods and services is likely to fall.

The CPI is based on the prices of a carefully selected market basket of goods, all of which consumers can purchase at a supermarket.

Core inflation figures omit healthcare prices, but not energy prices.