Future Business Leader Achievments (FBLA) Economics Practice Exam

What is generally considered a sign of healthy economic activity?

1. High unemployment rate

2. Low inflation rate

3. High production output

4. Stagnant GDP growth

The correct answer is: High production output

High production output is generally considered a sign of healthy economic activity because it indicates that businesses are producing goods and services at an effective rate, which in turn suggests strong demand from consumers and industries. When production levels are elevated, it often correlates with increased employment opportunities as companies require more workers to meet the demands of production. This can also lead to a positive cycle of economic growth, where more production leads to higher wages, more consumer spending, and further investment in businesses. In contrast, high unemployment rates reflect an economy that is struggling to provide jobs, which can dampen consumer confidence and spending. Low inflation can be good, but it may also indicate weak demand, whereas inflation that is too low could lead to deflationary pressures. Stagnant GDP growth suggests that the economy is not expanding, which can be a concern for future economic prospects. Thus, high production output stands out as a clear indicator of a robust and vibrant economy.