chapter 17 - the economic cycle

Question 1

the economic cycle

Answer 1

graph that shows cyclical economic GDP over time

Question 2

economic affects of down turn on the cycle

Answer 2

1. lower aggregate demand
2. more unemployment
3. deficit may rise
4. investment decreases
5. GDP slows
6. decreased national income
7. confidence falls
8. inflation slows

Question 3

economic affects of an upswing

Answer 3

1. confidence increases
2. increased national income
3. output expands
4. GDP grows
5. inflation rises
6. unemployment falls
7. investment increases
8. deficit may fall
9. aggregate demand increases

Question 4

leading indicators ( early indicators of economic activity )

Answer 4

1. rising share prices and stocks
2. business investment
3. house prices
4. confidence

Question 5

central indicators ( measures of economic activity )

Answer 5

1. GDP, GNP, GNI, nominal and real rates
2. consumption

Question 6

lagging indicators ( consequences of economic activity )

Answer 6

1. unemployment
2. wages
3. price indices

Question 7

stagflation

Answer 7

the situation where inflation is rising, but economic growth is slowing - caused by rising costs