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11. Calculate GDP using the expenditure approach in the following situation: Consumption = $10,000,000 Investment = $1,000,000 Government Spending = $2,000,000 Exports = $2,000,000 Imports = $500,000 A $11,500,000 Good choice! B. $14,500,000 C. $15,000,000 D. $10,000,000 Feedback: GDP is calculated using the expenditure approach as C + | + G + X - M. In this example, $10,000,000 + $1,000,000 + $2,000,000 + $2,000,000 - $500,000 = $14,500,000 Reference | Chapter 3 — Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace 12.Areview of economic indicators shows that GDP, corporate profits, and industrial production are steadily rising. Choose the correct statement. Average duration of employment has likely fallen. Manufacturing and trade sales volume will likely fall. Good choice! The economy is currently in the expansion phase. OO0 w > Economic growth should be expected to decline soon. Feedback: The economic indicators listed are coincidental indicators. Coincidental indicators help economists to determine which phase of the business cycle an economy is currently in. A coincidental indicator may be used to identify, after the fact, the dates of peaks and troughs in the business cycle. Manufacturing and trade sales volume is also a coincidental indicator and would have likely risen along with the other indicators. Average duration of employment is a lagging indicator and would typically fall after an economic downturn, which is not what is indicated here. Reference | Chapter 3 — Overview of Economics Learming Dol e —— 13.What is the term used to refer to the difference between GDP based on actual production and potential production? A Frictional unemployment. Good choice! B. Output gap. C. Nominal GDP. D Real GDP. Feedback: The output gap is the difference between real GDP (actual production) and potential GDP (what the economy is capable of producing). Reference | Chapter 3 - Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace 8. What term applies to unemployment created by a new technology that eliminates the need for subway train drivers? Good choice! Structural. Natural. Cyclical. oo w > Frictional. Feedback: Structural unemployment results from changes in the economy, such as technological advances that reduce the need for human labour. Reference | Chapter 3 - Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace

9. The demand for blue widgets increases sharply due to a newspaper report that using blue widgets improves recovery from influenza. What can be said about the law of supply? Price and production both decrease. Good choice! Price and production both increase. Price decreases and production increases. oow > Price increases and production decreases. Feedback: The law of supply states that when demand is greater than supply, the price increases, and producers increase production to meet demand and maximize profit. Reference | Chapter 3 — Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace 10.1f the Consumer Price Index (CPI) was 140.6 last year and 146.9 this year, what was the inflation rate over the year? 4.12% 4.48% 6.04% 5.20% Good choice! oo w » Feedback: To calculate the rate of inflation over a period of time one must subtract the CPI at the beginning of the period from the CPI at the end of the period and then divide the result by the CPI at the beginning of the period. In this example, the solution can be derived as follows: (146.9 - 140.6) / 140.6 x 100. Reference | Chapter 3 — Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace 14.What stage in the business cycle typically has increasing wages, rising inflation, rising interest rates with slowing sales, and decreasing business investment? Expansion. Good choice! Peak. Recovery. oo w » Trough. Feedback: The top of the cycle is called a peak. A peak is characterized by the following activities: demand begins to outstrip the capacity of the economy to supply it; wages increase; inflation rises; interest rates rise and bond prices fall; sales begin to decline; business investment slows, and stock market activity begins to decline. Reference | Chapter 3 — Overview of Economics Learning Domain | An Introduction to the Mutual Funds Marketplace 8. What term applies to unemployment created by a new technology that eliminates the need for subway train drivers? Good choice! A Structural. B. Frictional. C. Natural. D. Cyclical. Feedback: ~Structural unemployment results from changes in the economy, such as technological advances that reduce the need for human labour. Reference | Chapter 3 - Economic Principles Learning Domain | An Introduction to the Mutual Funds Marketplace

9. The demand for blue widgets increases sharply due to a newspaper report that using blue widgets improves recovery from influenza. What can be said about the law of supply? Price increases and production decreases. Price decreases and production increases. Good choice! Price and production both increase. Do w > Price and production both decrease. Feedback: The law of supply states that when demand is greater than supply, the price increases, and producers increase production to meet demand and maximize profit. Reference | Chapter 3 - Economic Principles Learning Domain | An Introduction to the Mutual Funds Marketplace Tiia document ia avadetle free of charge on ”ufi%& Jraining csi.ca/webapps/scor-scormengine-BBLEARN/defaultui/player/modern htmIZeonfiguration=Contentld% 7C_6 1 23T, Contse 600 107 066 _1 %21Coursemembershipld%7C_881317_1%21Sessionld%7C... /4 Downloaded by Manisha Nayyar (manishanayyar07 @gmail.com) 2020 Check Companion 10.1f the Consumer Price Index (CPI) was 140.6 last year and 146.9 this year, what was the inflation rate over the year? A 5.20% Good choice! B. 4.48% C. 6.04% D. 4.12% Feedback: To calculate the rate of inflation over a period of time one must subtract the CPI at the beginning of the period from the CPI at the end of the period and then divide the result by the CPI at the beginning of the period. In this example, the solution can be derived as follows: (146.9 - 140.6) / 140.6. Reference | Chapter 3 - Economic Principles Learning Domain | An Introduction to the Mutual Funds Marketplace Ny Page 6 of 42 14.What stage in the business cycle typically has increasing wages, rising inflation, rising interest rates with slowing sales, and decreasing business investment? A. Recovery. B Expansion. C. Trough. Good choice! D Peak. Feedback: The top of the cycle is called a peak. A peak is characterized by the following activities: demand begins to outstrip the capacity of the economy to supply it; wages increase; inflation rises; interest rates rise and bond prices fall; sales begin to decline; business investment slows, and stock market activity begins to decline. Reference | Chapter 3 - Economic Principles Learning Domain | An Introduction to the Mutual Funds Marketplace

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