Unit 13: Business Cycle

Question 1

the branch of economic theory that studies the behavior and decision making of an overall economy by focusing on economic perfromance

Answer 1

Macroeconomics

Question 2

statistical tools that provide info about the current performance of the economy

Answer 2

Economic Indicators

Question 3

point to future changes in the economy

Answer 3

leading indicators

Question 4

usually come after the economy changes

Answer 4

lagging indicators

Question 5

provide valuable information about the current state of the economy within a particular area because they happen at the same time as they change signal

Answer 5

coincident indicators

Question 6

the total market value of all final goods and services produced within a countrys borders during a 12 month period, and is used to measure a nations economic growth

Answer 6

GDP

Question 7

an inflation adjusted measure that reflects the value of all goods and services produced by an economy in a given year

Answer 7

real GDP

Question 8

an economic metric that breaks down a countrys economic output per person

Answer 8

GDP Per Capita

Question 9

measures the overall change in consumer prices based on a representative basket of goods and services overtime

Answer 9

Consumer Price Index (CPI)

Question 10

non institutionalized persons aged 16 or over either working or looking for a job (excluding miltary)

Answer 10

the labor force

Question 11

calculated each month by the Bureau of Labor Statistics. it is the ratio of unemployed individuals divided by the total number of persons in the civillians labor force expressed as a %

Answer 11

unemployment rate

Question 12

the situation where workers are between jobs for one reason or another

Answer 12

frictional unemployment

Question 13

when economic progress, a change in consumer tastes and preferences or a fundamental change in the operations of the economy reduces the demand for workers and their skills

Answer 13

structural unemployment

Question 14

unemployment directly related to swings in the business cycle

Answer 14

cyclical unemployment

Question 15

general decrease in the value of money due to increased prices and a higher money supply

Answer 15

inflation

Question 16

a fall in the general price level and increase in the value of money

Answer 16

deflation

Question 17

measures how rapidly the overall price level is changing. calculated by determining the % change in the CPI

Answer 17

inflation rate

Question 18

What does CPI measure?

Answer 18

inflation rate

Question 19

1. distored spending patterns
2. reduced purchasing power
3. loss of economic efficiency

Answer 19

consequences of inflation

Question 20

overall increases in demand pull up the average level of prices

Answer 20

demand pull inflation

Question 21

occurs when overall prices increase due to increases in the cost of wages and raw materials

Answer 21

cost push inflation

Question 22

relatively low rate of inflation usually 1-3 percent annually

Answer 22

creeping inflation

Question 23

an extremely high rate of inflation over a short period of time

Answer 23

hyperinflation

Question 24

a period of stagnant economic growth coupled with inflation

Answer 24

staglfation

Question 25

the quantity and quality of material goods and services available to a given population

Answer 25

standard of living

Question 26

result of systematic changes in real GDP marked by alternating periods of expansion and contraction

Answer 26

business cycle

Question 27

rise and fall of real GDP overtime on an irregular basis

Answer 27

business fluctuations

Question 28

has 2 alternatiing phases:
1. contraction
2. expansion

Answer 28

phases of the business cycle

Question 29

a prolonged contraction lasting 6+ months

Answer 29

recession

Question 30

point where GDP stops going up

Answer 30

peak

Question 31

turnaround point where real GDP stops going down, and the next expansion begins

Answer 31

trough

Question 32

a period of uninterrupted growth of real GDP

Answer 32

expansion

Question 33

growth path the economy would follow if it were not interrupted by alternating periods of recession and recovery

Answer 33

trend line