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Flashcards in Economic Fluctuations Deck (24)
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1

True or false. Until the 1970s, inflation rates in the United States tended to be low and growth was slow and unemployment was high.

True

2

Economy experience a slow growth, high unemployment, and high inflation all at once.

Stagnation

3

And observed and repeated pattern of the ups and downs in output, employment, and prices.

Business cycle

4

Which phase of the business cycle shows output increasing, prices rising rapidly, and unemployment falling?

Expansionary phase

5

Government actions design to smooth out ups and downs and output, employment, and prices.

Stabilization policy

6

What phase of the business cycle shows a downturn of output that continues for two consecutive quarters?

Recession

7

What phase of the business cycle shows the upturn from trough to peak?

Expansion

8

The recession of 1929 to 1939 was so severe it was given what special name?

The great depression

9

A very severe economic downturn

Depression

10

True or false. President Harry Truman once said that when your neighbor is out of work, that's a recession; but when you lose your job, that's a depression.

True

11

A situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains high.

Stagflation

12

The United States is in a recession if

1) The gross domestic product (GDP – real output) declines for two successive quarters
2) nominal output declines for two successive quarters
3) The price level falls in 2 successive quarters
4) unemployment rises in 2 successive quarters

The GDP declines for two successive quarters

A negative growth of the GDP or gross domestic product for two consecutive quarters marks the start of a recession.

13

True or false. I wore in the middle is that affects the US stable economy could cause a contraction.

True

14

True or false. A contraction means that the economic activity has increased.

False

15

A contraction means that the economic activity has slowed down.

True

16

True or false. During the great recession of 2007 to 2009 do United States experienced decreasing unemployment and a high rate of inflation.

False

17

True or false. During the great recession of 2007 to 2009 the United States experienced increasing unemployment and a low rate of inflation.

True

18

Over time, there is a tendency for

1). Major macroeconomic variables to move together in a predictable way
2) inflation and unemployment to increase simultaneously
3) major macroeconomic variables to behave unpredictably
4) productivity and unemployment to increase simultaneously

Major macroeconomic variables to move together in a predictable way

19

Economists use the phrase "business cycle" when discussing

1) movements in interest rates
2) fluctuations in aggregate measures of economic output or income
3) fluctuations in employment
4) changes in economic productivity

Fluctuations in aggregate measures of economic output or income

Aggregate measures of economic output and incomes are what define the business cycle.

20

During the expansionary phase of the business cycle, it is likely that real income will

1) increase, the price level will decrease, and the unemployment rate will decrease
2) increase, the price level will increase, and the unemployment rate will decrease
3) increase, the price level will increase, and the unemployment rate will increase
4) decrease, the price level will increase, and the unemployment rate will increase

Increase, the price level will increase, and the unemployment rate will decrease.

21

What are the turning point of the business cycle called

Peaks and troughs

22

Put the following for phases of the business cycle in the correct order.

Expansion
Recession
Trough
Peak

The correct order is peak, recession, trough, expansion

23

The longest contractionary period in the US was

1) The Great Recession
2). The double dip recession of the early 1980s
3) The Great Depression
4) The recession in the 1990s

The great depression

The great depression lasted 10 years from 1929 to 1939.

24

Since World War II the highest unemployment rate during a downturn was

1) 10.0%
2) 10.8%
3) 25%

The correct answer is 10.8%. This occurred in October 1982.