13. Understanding Business Cycles

Question 1

Business cycles

Answer 1

Are recurrent expansions and contractions in economic activity affecting broad segments of the economy.

Question 2

Classical cycle

Answer 2

Refers to fluctuations in the level of economic activity when measured by GDP in volume terms.

Question 3

Coincident economic indicators

Answer 3

Turning points that are usually close to those of the overall economy; they are believed to have value for identifying the economy’s present state.

Question 4

Diffusion index

Answer 4

Reflects the proportion of the index’s components that are moving in a pattern consistent with the overall index.

Question 5

Economic indicators

Answer 5

Economic statistics provided by government and established private organizations that contain information on an economy’s recent past activity or its current or future position in the business cycle.

Question 6

Growth cycle

Answer 6

Refers to fluctuations in economic activity around the long-term potential trend growth level, focusing on how much actual economic activity is below or above trend growth in economic activity.

Question 7

Growth rate cycle

Answer 7

Refers to fluctuations in the growth rate of economic activity.