**Complete the Review Sheet and you may use it on the Quiz.**
Define Terms
1. GDP
2. Inflation
3. Deflation
4. Types of unemployment (know definition and recognize examples of
each)
a. frictional
b. seasonal
c. cyclical
d. technological
e. structural
5. Recession
6. Depression
7. Business Cycle
a. expansion/recovery
b. peak
c. contraction
d. trough
8. Real GDP
9. Nominal (current) GDP
10. Capital
11. "intermediate goods"
12. "final goods"
13. Poverty rate
14. Poverty level (threshold)
Review Questions
1. What types of products are NOT counted in the GDP? Give at
least two broad categories.
2. Why must the GDP be adjusted when it is compared to the GDP of previous
years?
3. How do we know that the economy is in recession?
4. Explain how each of the following affect the business cycle (be
sure to mention the effect on GDP)
a. money/credit
b. external factors
c. consumer expectations
5. What can economists use to predict changes in the business cycle?
6. What three conditions do people have to meet to be considered unemployed?
7. Why is the unemployment rate probably inaccurate? (2 reasons)
8. Explain 1 cause of inflation.
9. Describe 1 negative effect of inflation.
10. Describe 1 positive effect of inflation.
11. Explain a couple of reasons for the huge income gap.
12. What has been the recent trend of the poverty rate? (up/down?)
13. Explain two reasons for the widening income gap.
14. Explain a couple of actions that the government could undertake
in order to reduce the income gap. Briefly evaluate each one.
15. Why has the minimum wage lost some of its real purchasing power?