Quiz Six Flashcards

1
Q

If structural unemployment falls, natural rate of employment

A

Rises

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2
Q

Recession

A

Significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP

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3
Q

Peak

A

End of an expansion, with recession starting next month

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4
Q

Trough

A

End of a recession, expansion starts next month

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5
Q

Business cycle

A

Cycle of expansions and recession

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6
Q

What happens to real GDP in a recession

A

Drops due to a decline in economic activity

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7
Q

Depressions

A

Severe economic recession

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8
Q

Interest rate

A

Rate at which we borrow and lend

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9
Q

Federal Reserve

A

US central bank

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10
Q

The Fed’s dual mandate

A

Effectively promote the goals of maximum employment, stable prices, and mandate long term interest rates

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11
Q

Monetary policy and COVID

A

Federal funds interest rate was about 0 and stayed there until max employment resolved

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12
Q

Monetary policy

A

Actions the federal reserve takes to manage the money supply and interest rates

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13
Q

Fiscal policy

A

Changes in federal taxes and purchases that are intended to achieve macro policy objectives

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14
Q

Aggregate demand curve

A

Shows relationship between the price level and quantity of rGDP demanded by households, firms, and the government

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15
Q

Short term aggregate supply curve

A

Shows short term relationship between price level and quantity of rGDP supplied by firms

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16
Q

Why does the demand curve slope downward?

A

Changes in price level effects each component of demand
International trade effect

17
Q

The curve shifts if

A

Variables other than price level change

18
Q

The curve moves

A

Price changes, but other variables remain constant

19
Q

Variables that shift the curve

A

Changes in monetary and fiscal policy
Changes in the expectations of households and firms
Changes in foreign variables (imports, exports, and prices)

20
Q

Why is the short run aggregate supply curve upward sloping

A

As price level increases, the quantity of goods and services firms will supply does as well

21
Q

Why do recessions occur

A

A sudden, negative event occurs