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Economic Indicators

Description: Economic Indicators Quiz
Number of Questions: 14
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Tags: economics economic education economic indicators
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Which of the following is a measure of the overall price level of goods and services in an economy?

  1. Consumer Price Index (CPI)

  2. Producer Price Index (PPI)

  3. Gross Domestic Product (GDP)

  4. Unemployment Rate

Show answer
Correct Option: A
Explanation:

The Consumer Price Index (CPI) measures the average change in prices over time for a basket of goods and services purchased by urban consumers.

What is the primary function of the Federal Reserve in the United States?

  1. To regulate the banking system

  2. To set interest rates

  3. To control inflation

  4. All of the above

Show answer
Correct Option: D
Explanation:

The Federal Reserve has a broad range of responsibilities, including regulating the banking system, setting interest rates, and controlling inflation.

Which of the following is a measure of the value of all goods and services produced in an economy over a specific period of time?

  1. Gross Domestic Product (GDP)

  2. Gross National Product (GNP)

  3. Net Domestic Product (NDP)

  4. National Income

Show answer
Correct Option: A
Explanation:

Gross Domestic Product (GDP) is the total value of all goods and services produced within the borders of a country in a given period of time.

What is the unemployment rate?

  1. The percentage of people in the labor force who are unemployed

  2. The percentage of people in the labor force who are employed

  3. The percentage of people in the labor force who are not working or looking for work

  4. The percentage of people in the labor force who are underemployed

Show answer
Correct Option: A
Explanation:

The unemployment rate is the percentage of the labor force that is unemployed.

What is the relationship between inflation and economic growth?

  1. Inflation is always bad for economic growth

  2. Inflation is always good for economic growth

  3. Inflation can be good or bad for economic growth, depending on the circumstances

  4. Inflation has no impact on economic growth

Show answer
Correct Option: C
Explanation:

Inflation can be good for economic growth in the short term, as it can stimulate spending and investment. However, in the long term, inflation can be harmful to economic growth, as it can lead to higher interest rates and lower consumer confidence.

What is the difference between a recession and a depression?

  1. A recession is a mild economic downturn, while a depression is a severe economic downturn

  2. A recession is a short-term economic downturn, while a depression is a long-term economic downturn

  3. A recession is characterized by high unemployment, while a depression is characterized by low unemployment

  4. A recession is characterized by falling prices, while a depression is characterized by rising prices

Show answer
Correct Option: A
Explanation:

A recession is a mild economic downturn, while a depression is a severe economic downturn. A recession is typically characterized by a decline in economic activity, such as a decrease in output, employment, and spending. A depression is a more severe economic downturn, with a prolonged decline in economic activity.

What is the purpose of an economic indicator?

  1. To measure the performance of an economy

  2. To forecast future economic conditions

  3. To identify economic problems

  4. All of the above

Show answer
Correct Option: D
Explanation:

Economic indicators are used to measure the performance of an economy, forecast future economic conditions, and identify economic problems.

Which of the following is an example of a leading economic indicator?

  1. Stock prices

  2. Consumer confidence index

  3. Building permits

  4. Initial jobless claims

Show answer
Correct Option: D
Explanation:

Initial jobless claims are an example of a leading economic indicator, as they can provide early warning signs of changes in the labor market.

Which of the following is an example of a lagging economic indicator?

  1. Unemployment rate

  2. Inflation rate

  3. Gross domestic product (GDP)

  4. Consumer spending

Show answer
Correct Option: A
Explanation:

The unemployment rate is an example of a lagging economic indicator, as it takes time for the labor market to adjust to changes in the economy.

What is the relationship between economic growth and unemployment?

  1. Economic growth always leads to lower unemployment

  2. Economic growth always leads to higher unemployment

  3. Economic growth can lead to either lower or higher unemployment, depending on the circumstances

  4. Economic growth has no impact on unemployment

Show answer
Correct Option: C
Explanation:

Economic growth can lead to either lower or higher unemployment, depending on the circumstances. In the short term, economic growth can lead to higher unemployment, as new workers enter the labor force. However, in the long term, economic growth typically leads to lower unemployment, as new jobs are created.

What is the relationship between inflation and unemployment?

  1. Inflation is always bad for unemployment

  2. Inflation is always good for unemployment

  3. Inflation can be good or bad for unemployment, depending on the circumstances

  4. Inflation has no impact on unemployment

Show answer
Correct Option: C
Explanation:

Inflation can be good for unemployment in the short term, as it can lead to higher wages. However, in the long term, inflation can be harmful to unemployment, as it can lead to higher interest rates and lower consumer confidence.

What is the difference between real GDP and nominal GDP?

  1. Real GDP is adjusted for inflation, while nominal GDP is not

  2. Real GDP is the value of all goods and services produced in an economy in a given year, while nominal GDP is the value of all goods and services produced in an economy in current prices

  3. Real GDP is the value of all goods and services produced in an economy in constant prices, while nominal GDP is the value of all goods and services produced in an economy in current prices

  4. Real GDP is the value of all goods and services produced in an economy in current prices, while nominal GDP is the value of all goods and services produced in an economy in constant prices

Show answer
Correct Option: A
Explanation:

Real GDP is adjusted for inflation, while nominal GDP is not. Real GDP is the value of all goods and services produced in an economy in constant prices, while nominal GDP is the value of all goods and services produced in an economy in current prices.

What is the relationship between the trade deficit and the exchange rate?

  1. A trade deficit leads to a stronger exchange rate

  2. A trade deficit leads to a weaker exchange rate

  3. A trade deficit has no impact on the exchange rate

  4. The relationship between the trade deficit and the exchange rate is complex and depends on a number of factors

Show answer
Correct Option: D
Explanation:

The relationship between the trade deficit and the exchange rate is complex and depends on a number of factors, including the size of the trade deficit, the overall economic conditions in the countries involved, and the policies of the central banks.

What is the purpose of a central bank?

  1. To regulate the banking system

  2. To set interest rates

  3. To control inflation

  4. All of the above

Show answer
Correct Option: D
Explanation:

Central banks have a broad range of responsibilities, including regulating the banking system, setting interest rates, and controlling inflation.

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