Chapter 9

Question 1

Business Cycle

Answer 1

alternating increases and decreases in economic activity over time

Question 2

Peak

Answer 2

highest GDP, full employment, near capacity

Question 3

Recession

Answer 3

low point, increase of unemployment, decline in trade

Question 4

Trough

Answer 4

lowest point

Question 5

Economic shock

Answer 5

unexpected event that businesses don’t account for

Question 6

Sticky prices downwards

Answer 6

prices don’t fall wheb people buy less

Question 7

Cyclical impact

Answer 7

durable good are affecred most

Question 8

Criticism of unemploment

Answer 8

understates, since part time is counted as full time and discouraged worker are not counted as unemployed

Question 9

frictional employment

Answer 9

individuals searching for jobs or waiting to take jobs soon

Question 10

Structural Unemployment

Answer 10

occurs due to changes in structure if the demand of labor (ex: robot replacement)

Question 11

Cyclical Unemployment

Answer 11

causes by recession phase of business cycle

Question 12

Okun’s Law

Answer 12

GDP related to unemployment

Question 13

Natural Rate Of Unemploymrnt

Answer 13

frictional employment+ structural employment

Question 14

Labor Force Participation Rate

Answer 14

percentage if the population that is employed or unemployed

Question 15

Inflation

Answer 15

General rise in the price level

Question 16

Demand Pull Inflation

Answer 16

Supply shock, caused by reckless spending on the consumers part

Question 17

Cost Pull Inflation

Answer 17

rise in per unit output cost, can be caused by natural disasters

Question 18

Core inflation

Answer 18

focuses on more stable prices