Economic Change Analysis

Question 1

Changes that have a long term, consistent direction can be called a what?

Answer 1

Trend

Question 2

A long term trend is made up of short term WHAT?

Answer 2

Fluctuations. Think of a graph showing the jagged fluctuations of short term changes with a smooth trend line overlapping it.

Question 3

Name some examples of long term trends in the United States

Answer 3

Rising prices of residential housing, mechanization of production from 19th to the 20th century, a shift from goods production to a service economy in the second half of the 20th Century

Question 4

When economic activity go up and down rather than grow or decline steadily, they are said to WHAT

Answer 4

fluctuate

Question 5

What are the four kinds of economic fluctuations?

Answer 5

1.) Periodic 2.) Irregular, 3.) Random, 4.) Cyclical

Question 6

Predictable (in duration and time of year), regular market fluctuations (like “back to school sales” or Christmas Season, or summer tourist season for oceanside communities) are called what?

Answer 6

Periodic

Question 7

A fluctuation that occurs as a result of an unpredictable event (war, pandemics, crop failures) or when a particular product may be unexpectedly popular causing a manufacture shortage is called a WHAT?

Answer 7

random fluctuation

Question 8

The Olympics causes a short term boom for a local economy. What type of economic fluctuation would this be?

Answer 8

Irregular

Question 9

When a fluctuation is predictable, but not a regular occurrence, what type of fluctuation is it?

Answer 9

irregular

Question 10

What type of fluctuations can be loosely predicted? The sequence of expansion, contraction, and revival is recurrent over many years, but not consistent in length and not exact in time of occurrence

Answer 10

Business Cycle Fluctuation

Question 11

A generally defined business cycle contains four components. What are they?

Answer 11

Contraction, recession, expansion, and peak

Question 12

When looking at a graph of a business cycle, there are many fluctuations that make up the whole. What are bottom points of each small fluctuation segment called? Where a contraction becomes an expansion?

Answer 12

Trough

Question 13

When looking at a graph of a business cycle, there are many fluctuations that make up the whole. What are top points of each small fluctuation segment called? Where an expansion becomes a contraction?

Answer 13

Peaks

Question 14

the segment of a curve in a business cycle that reflects decline in economic activity is called WHAT

Answer 14

Contraction

Question 15

the segment of a curve in a business cycle that reflects a rise in economic activity is called WHAT

Answer 15

expansion

Question 16

What is an upper turning point vs a lower turning point in an economic cycle?

Answer 16

The Upper turning point is the point in which the contraction begins and the lower turning point is when expansion begins

Question 17

What does an amplitude measure?

Answer 17

the highness and lowness – the difference between a trough and a peak on a business cycle graph.

Question 18

By measuring amplitude and duration within a business cycle, one can identify 5 common economic conditions. What are there?

Answer 18

Recession, Depression, Recovery, Prosperity, and Boom

Question 19

When there are two successive quarters of contraction, this economic condition is called a WHAT?

Answer 19

Recession

Question 20

What economic condition is characterized by cautious spending and increase in savings or a decline in GDP?

Answer 20

Recession

Question 21

When unemployment is high and production is very slowed down, this economic condition is called WHAT?

Answer 21

Depression

Question 22

When an economy begins to bounce back after a depression or recession it’s called what?

Answer 22

Recovery

Question 23

High employment, productivity, and income combine to create a sense of stability in the market called WHAT

Answer 23

prosperity

Question 24

A period of unusually strong demand for goods and services accompanied by rapidly rising prices is called what?

Answer 24

Boom

Question 25

An economy in a state of intoxication where there is an illusion of limitless opportunity is called what?

Answer 25

Booming economy - think Gold Rush.

Question 26

What are common economic indicators used to judge the condition of overall economic health? Quarterly and monthly measurements of WHAT?

Answer 26

GDP, employment, income, and spending. Level of activity in the housing construction industry,

Question 27

Why is full employment an indicator of impending inflation?

Answer 27

The conventional view is that full-employment can lead to inflationary pressures within an economy. As more people have purchasing power, demand for goods and services grows, leading to demand outpacing supply (demand-pull inflation). And increasing demand drives prices up too - leading to cost-push inflation (sellers know there is a lack of alternatives, so they can raise prices just to raise them).

Question 28

Why are population shifts an early warning indicator for economic health?

Answer 28

If a military base closes in a town, the town will be devastated by the removal of such an enormous employment and consumption factor of the local economy

Question 29

What is a good economic indicator for judging whether the housing market is robust or soft? And why?

Answer 29

Home repairs. In downturns repair businesses flourish since people may have enough money to repair their home, they don't have enough for big ticket items like cars or houses.

Question 30

What are Leading VS. Lagging VS. Coincident indicators

Answer 30

In data collection, some data indicators reflect present state of the economy (Coincident), some trail the business cycle continuing to rise after the downturn has started (lagging) and some warn far in advance (leading)

Question 31

Who published a monthly composite index based on 11 economic indicators?

Answer 31

Dept. of Commerce

Question 32

A monetary measure of the value of all final goods and services produced in the economy during a year is called WHAT?

Answer 32

GNP

Question 33

What does GDP measure?

Answer 33

Individual consumption, investment spending, government spending, and net exports

Question 34

The point on a business cycle at which a decline in economic activity reaches bottom is referred to as WHAT?

Answer 34

the lower turning point

Question 35

in a business cycle, the period between two peaks is referred to as what?

Answer 35

a duration

Question 36

Which of the major economic indicators using a "market basket" of consumer goods?

Answer 36

CPI

Question 37

The gross national product is commonly known as A.) the national debt, B.) the notional income or C.) the total output of all goods and services produced

Answer 37

B.)national income

Question 38

In GDP analysis, a refrigerator would be considered which of the following and why? A) Durable goods, B.) nondurable goods, C.) investment spending

Answer 38

A.) Durable goods because it should last more than 3 years.

Question 39

Which of the following stock market indicators relies on a sample of 100 non financial domestic companies across industries? A.) Dow Jones, B.) Nasdaq, C.) Wilshire, D.) American

Answer 39

B>) Nasdaq 100