Chapter 12

Question 1

Goods that last a short period of time, such as food, light bulbs and sneakers

Answer 1

Nondurable goods

Question 2

The loss of the value of capital equipment that rules from normal wear and tear

Answer 2

Depreciation

Question 3

The average of all prices in the economy

Answer 3

Price level

Question 4

A period of economic growth a measured by a rise in the real GDP

Answer 4

Expansion

Question 5

Steady, long term increase in real GDP

Answer 5

Economic growth

Question 6

The height of an economic expansion, when real GDP stops rising

Answer 6

Peak

Question 7

Period of economic decline marked by falling GDP

Answer 7

Contraction

Question 8

The lower point in an economic contraction, when real gross domestic product stops falling

Answer 8

Trough

Question 9

The prolonged economic contraction

Answer 9

Recession

Question 10

A recession that is especially long and severe

Answer 10

Depression

Question 11

Key economic variable that economists use to predict a new phase of the business cycle

Answer 11

Leading indicators

Question 12

Goods that last for a relatively long time, such as refrigerators, cars and DVD players

Answer 12

Durable goods