The Business Cycle 3 (J) done

Question 1

GDP definition

Answer 1

the total value, in dollars, of all final goods and services produced with the nation each year

Question 2

The economy is shrinking if GDP is…

Answer 2

smaller than the last year

Question 3

The economy is expanding if GDP is…

Answer 3

bigger than the last year

Question 4

the business cycle meausers

Answer 4

alternating increases and decreases in the level of economic or business activity of varying fluctuations and length

Question 5

how are increases and decreases in business activity measured?

Answer 5

percentage change in real GDP

Question 6

real GDP formula

Answer 6

GDP year 2 - GDP year 1
___________________________ x 100
GDP year 1

Question 7

phases of the business cycle

Answer 7

upswing, boom, downturn, trough

Question 8

upswing explanation

Answer 8

wages increase, unemployment decrease, consumer confidence increase, consumer spending increase, output increase, profits increase

Question 9

peak explanation

Answer 9

monetary policy used to reduce consumption, cycle begins to contract due to to economy at limit. GDP at maximum, below full employment level

Question 10

trough explanation

Answer 10

low taxes, high government spending, investments rise, consumption rises, low interest rates

Question 11

3 economic indicators

Answer 11

leading, coincident, lagging

Question 12

leading economic indicator:

Answer 12

economic data that may correspond with a future movement or change in the economy

Question 13

leading economic indicator examples:

Answer 13

building approval levels, share prices, consumer expectations, business confidence

Question 14

coincident economic indicator:

Answer 14

economic data that changes simultaneously with general economic conditions, reflecting the current state of the economy

Question 15

coincident economic indicator examples:

Answer 15

retail sales, job advert numbers, overtime hours, new car registrations, money supply

Question 16

lagging economic indicator:

Answer 16

economic data that changes sometime after the variable with which it is correlated changes. In the past

Question 17

lagging economic indicator examples:

Answer 17

interest rates, consumer debt, unemployment levels, bankruptcies, inflation