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Name: _____________________
Period: _________
Economics
Unit 4 Study Guide
Chapter 11:
Define and answer the following terms and questions.
1. Economy:
2. Gross Domestic Product (GDP):
3. Consumption:
4. Investment:
5. Aggregate Expenditure:
6. Aggregate Income:
7. Depreciation:
8. Nominal GDP:
9. Real GDP:
10. Consumer Price Index (CPI):
11. Business Cycle:
12. Recession:
13. Expansion:
14. Leading Economic Indicators:
15. Aggregate Output:
16. Aggregate Demand:
17. Price Level:
18. Aggregate Demand Curve:
19. Aggregate Supply Curve:
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20. Describe what Gross Domestic Product measures.
21. Define the two ways to calculate the Gross Domestic Product and explain why they are
equivalent.
22. Identify what GDP calculations neglect.
23. Determine why and how to adjust GDP for changes over time in the general price level.
24. Distinguish between two phases of the business cycle, and compare the average length of
each. (Hint: Draw the business cycle.)
25. Differentiate among leading, coincident, and lagging economic indicators.
26. Explain what is meant by aggregate output and the economy’s price level.
27. Describe the aggregate demand curve and the aggregate supply curve, and show how they
determine the equilibrium level of price and aggregate output.
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Chapter 12:
Define and answer the following terms and questions.
1. Standard of living:
2. Productivity:
3. Labor productivity:
4. Human capital:
5. Physical capital:
6. Capital deepening:
7. Rules of the game:
8. Industrial market countries:
9. Developing countries:
10. Group of Eight (G-8) (formerly known as G-7):
11. Basic research:
12. Applied research:
13. Industrial policy:
14. Cluster:
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15. Explain how the PPF is used to analyze economic growth.
16. Define labor productivity and discuss what can increase it.
17. Explain why there is such a large difference among countries in the standard of living.
18. Evaluate the record of US labor productivity growth, and explain why even small
differences in growth rates are important.
19. Discuss the impact of research and development on the standard of living.
20. Explain the relationship between technological change and employment levels.
21. Describe industrial policy, and the arguments for and against its use.
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Chapter 13:
Define and answer the following terms and questions.
1. Full employment:
2. Underemployment:
3. Labor force:
4. Unemployment rate:
5. Labor force participation rate:
6. Unemployment benefits:
7. Inflation:
8. Demand-pull inflation:
9. Cost-push inflation:
10. Nominal interest rate:
11. Real interest rate:
12. Laissez faire:
13. Demand-side economics:
14. Stagflation:
15. Supply-side economics:
16. Cycle of poverty:
17. Welfare reform:
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18. Identify and define the four types of unemployment.
19. Discuss the unemployment rate, and describe how it differs over time and across groups.
20. Explain who is eligible for unemployment benefits in the US.
21. Describe the types of inflation, and identify two sources of inflation.
22. Identify the problems that unexpected inflation creates.
23. Explain what happened during the Great Depression in terms of aggregate demand and
aggregate supply.
24. Explain demand-side economics in terms of aggregate demand and aggregate supply.
25. What is happening when stagflation occurs?
26. Explain supply-side economics in terms of aggregate demand and aggregate supply.
27. Describe the link among jobs, unmarried motherhood, and poverty.
28. Identify some unplanned results of income-assistance programs.
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