Part IV. Economic Indicators - (Recession, Inflation, Depression, Hyperinflation) Read the scenario below and insert its correct economic indicator. One of the choices will be used twice. 1. An extended period of time that makes it hard for the economy to recover. Le, Stock Market Crash 2. Temporary downturn in the economy that results in the cutting of incomes, which makes businesses to cut jobs and reduce investments. 3. A cup of coffee cost .25 in 1970 is now $3.60 in 2020.

2. Alternative price indexes Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and services Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply. Shows up in the... GDP Scenario Deflator CPI A decrease in the price of a Chinese-made car that is popular among U.S. consumers An increase in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U.S., but not bought by U.S. consumers

13. Which of these statements regarding Consumer Price Index (CPI) are accurate? Select all that apply. A. The CPI can be computed for one industry or for the entire economy. B. CPI does not take into account a product's share of market sales when determining inflation for an entire economy. C. To figure out the current CPI, you first have to figure out the CPI for the base year. D. Inflation is the change in CPI.

6. Real versus nominal values and correcting for inflation Consider the following hypothetical economy with the following economic data. Year Nominal GDP GDP Deflator (Dollars) (Dollars) 2008 $325 100 2009 $1,260 315 2010 $1,280 400   Use the information from the previous table to fill in the following table. Hint: You will need to convert all the nominal values above into real 2008 dollars using the GDP deflator. Round your results to the nearest whole dollar when entering your answers. Year Real GDP (Dollars) (Base year 2008) 2008   2009   2010     From 2009 to 2010, nominal GDP    , and real GDP    .   The inflation rate in 2010 was    .   Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.   Nominal GDP…