Economic Indicators Flashcards
7 cards from real AP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Economic Indicators flashcards as text
When calculating GDP using the expenditure approach, net exports are defined as:
Answer: Total exports minus total imports
Net exports (NX) = exports − imports; a positive NX adds to GDP while a negative NX subtracts from it.
Structural unemployment is best described as unemployment caused by:
Answer: A mismatch between worker skills and available jobs
Structural unemployment arises when workers' skills or locations don't match the requirements of available jobs, often due to technological change.
If CPI was 120 in Year 1 and 126 in Year 2, the inflation rate between those years is:
Answer: 5%
Inflation rate = (126 − 120) / 120 × 100 = 5%.
Which of the following would NOT cause GDP to rise even if economic well-being improves?
Answer: Volunteer work increases substantially
GDP only counts market transactions; unpaid volunteer work, despite improving welfare, is not included in GDP.
The natural rate of unemployment includes which two types of unemployment?
Answer: Frictional and structural
The natural rate combines frictional (job-search) and structural (skills-mismatch) unemployment, both of which persist even in a healthy economy.
Real GDP per capita is considered a better measure of living standards than nominal GDP per capita because real GDP per capita:
Answer: Adjusts for price-level changes over time
Adjusting for inflation allows real GDP per capita to reflect actual changes in purchasing power rather than nominal price increases.
Which of the following best describes the GDP deflator?
Answer: A broad price index measuring all domestically produced goods and services
The GDP deflator covers all goods and services included in GDP, making it broader than the CPI, which tracks only a consumer basket.