Chapter 13 Measuring the Economy's Performance   1. The categories of economic activity that economists measure to compute GDP include each of the following EXCEPT __________     a) consumer goods and services.     b) business goods and services.     c) net exports.     d) net imports.   2. Disposable personal income is __________     a) the income that people have left after taxes, including Social Security contributions.     b) the total income individuals receive before personal taxes are paid.     c) the total income earned by everyone in the economy.     d) national income minus corporate income taxes, profits that businesses put back into their businesses, and Social Security contributions employers make; plus transfer payments.   3. Inflation can be defined as __________     a) a prolonged decline in the prices of goods and services.     b) an increase in the quantity of goods and services produced.     c) the decline in the purchasing power of money.     d) a rise in the purchasing power of money.   4. The consumer price index (CPI) measures __________     a) the change in price over time of a specific group of goods used by businesses.     b) the change in price over time of a specific group of goods and services the average household uses.     c) price changes in GDP.     d) inflation in all sectors of the economy.   5. Which of the following statements about the inverse relationship between aggregate quantity demanded and price is NOT TRUE?     a) As the price level goes up, the demand for real domestic output goes up as well.     b) The quantities of real domestic output demanded and price level move in opposite directions.     c) As the quantity demanded of real domestic output goes down, the price level goes up.     d) One of the reasons for the inverse relationship is the relative price of goods and services sold to other countries—as prices move down, exports increase. As prices move up, exports decrease.   6. The aggregate supply curve shifts to the right when __________     a) all firms experience lower costs of production.     b) all firms experience higher costs of production.     c) producers supply fewer goods in the marketplace.     d) the price level decreases.   7. The equilibrium price level occurs when __________     a) the aggregate quantity demanded exceeds the aggregate quantity supplied.     b) the aggregate quantity supplied exceeds the aggregate quantity demanded.     c) the aggregate quantity demanded and aggregate quantity supplied meet.     d) potential suppliers become actual suppliers.   8. The lowest point in the business cycle is called __________     a) a depression.     b) an expansion.     c) a recovery.     d) a trough.   9. Each of the following statements about severe downturns in the United States economy are true EXCEPT     a) the 1940 stock market crash sent the United States into a serious recession.     b) the 1980s started off with a small recession that developed into the most serious economic downturn since World War II.     c) in the 1930s, real GDP fell sharply, pushing the nation into the depths of depression.     d) the stock market crash of 1987 was followed by a mild recession in the early 1990s.   10. The main forces to which economists tend to link business fluctuations are __________     a) business investments, government activity, stock market activity, and external factors.     b) global activity, government activity, external factors, and psychological factors.     c) business investments, government activity, external factors, and psychological factors.     d) business investments, external factors, internal factors, and psychological factors.   11. The economic indicators that most concern American economists are the __________     a) GDPs for the past 10 years.     b) leading indicators.     c) coincident indicators.     d) lagging indicators.