ECONOMICS Test Study Guide

Unit 6 - Economic Performance

Below is a list of topics that will be covered on the Unit 6 test. Remember, the
unit test is open book and open notes, so feel free to reference this document
along with your unit notes and your course content when answering test
questions. You are welcome to use a calculator on this test if needed.

Macroeconomics
The graph for the macroeconomy
Definition of GDP
Be able to determine what kinds of activity would/would not be counted in
GDP in a given year
How to calculate GDP
The sum of the components, or sectors of GDP
Know the significance of a trade deficit, such as the one in the United
States (i.e. what must always be subtracted when calculating GDP?)
Real vs. Nominal GDP
The meaning of the two terms
How to calculate Real GDP when given a GDP Deflator
How to calculate the growth rate of GDP (whether Real or Nominal)
The business cycle
The stages of the cycle
 What should a healthy economy’s business cycle and GDP look like over
time?
Unemployment: its precise definition
How to calculate the unemployment rate
Cyclical, vs Structural, vs Frictional unemployment
Know the terms and be able to define/explain them
Understand how unemployment affects economic conditions in the
United States
Inflation
Define and calculate inflation and explain causes and impacts of inflation
The two types of inflation: demand-pull and cost-push
Poverty and Standard of Living
Identify measures of poverty and analyze how resource distribution
affects poverty
Know the effect of advancements in technology and training on
economic growth on standards of living
Consumer Price Index
How it is measured (the market basket)
How to calculate changes in the CPI from month-to-month
Productivity
What it means *and* why increases in productivity are so important
How to determine based on information/data if productivity is increasing
Official vs. Supplemental Poverty Measures
Income Redistribution

TEST ESSAY QUESTIONS:

 1. Formulate reasons as to why a recession might occur. Then, hypothesize
how total economic output and prices will behave in the years following
the recession.
2. Explain the three main types of unemployment experienced within an
economy. Provide at least one example demonstrating each type of
unemployment. (frictional, structural, and cyclical)
3. Explain how the money for a Negative Tax for Low-Income Earners could
be redistributed from high-income households.
4. How do improvements in technology and human capital influence
productivity, economic growth, and standard of living within an
economy? Be sure to provide an example of an improvement in
technology and an improvement in human capital.

ADDITIONAL STUDY TIPS

● Practice calculating different rates and economic indicators.
● List the stages of the business cycle and the conditions associated with
each stage.
● Identify all the types of unemployment.
● Rework problems from lessons on your own.
● Draw conclusions from trends in Nominal GDP and Real GDP.
● Make flashcards to test yourself on the vocabulary terms in this section.
● Talk with a friend or family member about the effectiveness of the
programs and policies the federal government implements to alleviate
poverty.