business cycles

Question 1

business cycles

Answer 1

fluctuations from the trend of real GDP

Question 2

booms

Answer 2

persistent positive deviations from trend

Question 3

recessions

Answer 3

persistent negative deviations from trend

Question 4

Hodrick-Prescott Filter

Answer 4

mathematical tool to separate a time series into trend & cycle

Question 5

nature of deviations from trend in real gdp

Answer 5

no regularity in AMPLITUDE or FREQUENCY of fluctuations in real GDP

Question 6

if deviations from trend in macroeconomic variable are positively (negatively) correlated with the deviations from trend in real GDP…?

Answer 6

then that variable is procyclical (countercyclical)

Question 7

components of GDP (2)

Answer 7

1. consumption
2. investment

Question 8

labor market variables (3)

Answer 8

1. employment
2. real wage
3. average labor productivity

Question 9

consumption’s correlation with real GDP (+/-)

Answer 9

positive (+) OR procyclical (coincident)

Question 10

real investment’s correlation with real GDP (+/-)

Answer 10

positive (+) OR procyclical (coincident)

Question 11

price level’s correlation with real GDP (+/-)

Answer 11

positive (+)

Question 12

inflation rate’s correlation with real GDP (+/-)

Answer 12

positive at low inflation rates; negative at high inflation rates

Question 13

employment’s correlation with real GDP (+/-)

Answer 13

positive (+) OR procyclical (lagging)

Question 14

unemployment’s correlation with real GDP (+/-)

Answer 14

negative (-) OR countercyclical

Question 15

average labor productivity’s correlation with real GDP (+/-)

Answer 15

positive (+) OR procyclical (coincident)