Download Name: KEY Date: ______ Class Period: ______ Chapter 3 Review

Name:KEY Chapter3
ReviewPacket
Date:__________
ClassPeriod:________
Instructions:Belowyouwillfindkeyinformationyoushouldunderstandandbeabletoapplyinatestingsituation.Anyactivity,
textbookreading,classdiscussion,andclassnotesareallfairgameforthetest.Youwillworkallclassperiod,independentlyon
thisreviewpacket.Itisyourresponsibilitytogoonlinetoourclasswebsiteandcheckyouranswers.Thereisanelectronicversion
ofthisreviewavailableonlineifyoupreferrespondingtothequestionsinthatmanner.
Objectives:
• IdentifythefourtypesofeconomicshiftsthattheUnitedStateshasexperienced.
• DescribewhatisshownbyGDP,theunemploymentrate,rateofinflation,andnationaldebt.
• Describethefourstagesofthebusinesscycle.
• Explainhowindividualsandgovernmentinfluencetheeconomy.
VOCABULARY–Youshouldbeabletodefine(morethanjustthedefinition)andusethefollowing
vocabularyterms….
ü GrossDomesticProduct(GDP)
o Thetotalvalueofthegoodsandservicesproducedinacountryinagivenyear.
o Economicindicator
o TheUnitedStateshasahighGDP.
ü StandardofLiving
o Importantmeasureofacountrieseconomichealth.
o Measuredbygoodsandservicesavailable.
ü Inflation
o Generalincreaseinpricesoveragivenperiodoftime.
o Buyingpowerwilldecrease.
ü Deflation
o Generaldecreaseinpricesofagivenperiodoftime.
o Supplyisgreaterthandemand.
o Couldleadtothecollapseofaneconomy.
ü BudgetDeficit
o Spendingmorethanreceiving.
ü NationalDebt
o Thetotalamountofmoneyagovernmentowes.
ü BudgetSurplus
o Revenueexceedsspending.
ü BusinessCycle
o Riseandfallofeconomicactivityovertime.
o Fourstages
o Repeatedstages
ü Prosperity
o Peak
o Everythingincreases:wages,economicactivity,etc.
ü Recession
o Economicactivityslows,unemploymentincreases,etc.
ü Depression
o Deeprecession,rippleeffect,highunemploymentetc.
ü Recovery
o Riseinbusinessactivity,unemploymentratedecreases,etc.
REINFORCEMENTQUESTIONS–Respondtoeachofthequestionsbelow,inordertodemonstrateyour
understandingoftheconcept.
A.) ExplainthefourtypesofeconomicshiftstheUnitedStateshasexperiencedovertheyears.Note:
thisisnotthebusinesscycle–itisfromyourreadingofthechapter.
1600s-bartering,servicebasedeconomy
1700s–farming,agriculturebased
1800s-Industrialrevolution
1990s–technologicalrevolution,prosperity
B.) WhatisthepurposeoftheGDP?
Todeterminehowwellaneconomyisperforminginagivencountry.
C.) Describewhattheunemploymentraterepresents.
Itrepresentsthenumberofpeoplewhoareableandwillingtoworkbutarenot.
D.) Definerateofinflationandnationaldebt.Thenexplainhowthetwoconceptsarerelated.
Gradualsteadyincreaseinprices,buyingpowerdecreases,representedasapercentage.
Totalamountgovernmentowes.
Potentiallythegovernmentcouldprintmoremoneytopaydownthenationaldebt–avery
temptingbutinflationarysolution.,ßthisisonepossibleanswer.
E.) EstimatethecurrentlevelofnationaldebtfortheUnitedStates.Explainwhythisnumberis
continuingtoincrease.
17trilliondollars–thebudgetdeficitiscontinuingtogrow.
F.) Whatisthemainsourceofincomeforthegovernment?
Taxes
a. Listthreeareasoftheeconomywherethisincomeisused.
Education,defense,socialsecurity
G.) Drawasampleofthebusinesscycle.Besuretolabeleachsection.
Refertopage44inyourtextbook.
H.) YesorNo–Isitpossibletojumpfromstagetostageonthebusinesscycle?
I.) CriticalThinkingWouldcarsmadeinthiscountrybyaforeign-ownedcompanybeincludedin
GDP?Whyorwhynot?
Carsmadeinthiscountrybyaforeign-ownedcompanyareincludedintheGDP.However,
itemsmadeinaforeigncountrybyanAmericancompanywouldnotbeincludedintheGDP.
J.) CriticalThinkingWhichwouldbeincludedintheGDP:babysittingathomeorworkingatadaycarecenter?
BabysittingisprobablynotincludedintheGDP.Day-carecenterswouldprobablybereported
andincluded.
K.) CriticalThinkingWhyisinflationespeciallydifficultforindividualswhoareretired?
Retiredindividual’sincomestaysthesameandthecostofgoodsandservicesincreasesunder
inflation.
L.) ExplainwhythestandardoflivingishigherintheUnitedStatesthaninmanyothercountries.
Thestandardoflivingishighbecauseofproductivity.Weproduceanabundanceofgoodsand
servicesbecauseoftechnology,accesstorawmaterials,aneducatedworkforce,andthe
entrepreneurialpositiveattitudeandsupport.
M.) CriticalThinkingSupposeyougotoastoretobuyasodabutnoticethepriceis20centshigher
thanitwaslastweek.Otherpricesareunchanged.Isthisanexampleofinflation,deflation,or
neither?Whyorwhynot?No,inflationisageneralpriceincreaseoveranarrayofitemsover
time.
N.) Explaintherippleeffect.
Whenoneindustryfails,thereisadownwardspiralthatimpactseveryindustryinevery
economy.