CH 13 Vocab

Question 1

Business Cycles

Answer 1

systematic changes in real GDP marked by alternating periods of expansion and
contraction.

Question 2

Business Fluctations

Answer 2

changes in real GDP marked by alternating periods of expansion and
contraction that occur on an irregular basis.

Question 3

Recession

Answer 3

decline in real GDP lasting at least two quarters or more.

Question 4

Expansion

Answer 4

period of uninterrupted growth of real GDP, industrial production, real income, and
employment lasting for several years or more; recovery from recession.

Question 5

Trend Line

Answer 5

growth path the economy would follow if it were not interrupted by alternating periods
of recession and recovery.

Question 6

Depression

Answer 6

state of the economy with large numbers of unemployed, declining real incomes,
overcapacity in manufacturing plants, and general economic hardship.

Question 7

Leading Economic Indicator

Answer 7

statistical series that normally turns down before the economy turns
down or turns up before the economy turns up.

Question 8

Dow Jones Industrial Average

Answer 8

an index of 30 representative stocks used to monitor price
changes in the overall stock market.

Question 9

Inflation

Answer 9

sustained rise in the general level of prices of goods and services.

Question 10

Deflation

Answer 10

sustained decrease in the general level of the prices of goods and services.

Question 11

Consumer Price Index

Answer 11

index used to measure price changes for a market basket of frequently used customer items

Question 12

Market Basket:

Answer 12

representative collection of goods and services used to compile a price index

Question 13

Hyperinflation

Answer 13

abnormal inflation in excess of 500 percent per year; last stage of monetary
collapse.

Question 14

Producer Price Index

Answer 14

index used to measure prices received by domestic producers; formerly
called the wholesale price index.

Question 15

Demand-Pull Inflation

Answer 15

explanation that prices rise because all sectors of the economy try to buy
more goods and services than the economy can produce.

Question 16

Cost-Push Inflation

Answer 16

explanation that rising input costs, especially energy and organized labor, drive up the cost of products for manufacturers and thus cause inflation.

Question 17

Unemployed

Answer 17

state of working for less than one hour per week for pay or profit in a non-family-owned business, while being available and having made an effort to find a job during the past month.

Question 18

Outsourcing

Answer 18

hiring outside firms to perform non-core operations to lower operating costs.

Question 19

GDP Gap

Answer 19

difference between what the economy can and does produce; annual opportunity cost of
unemployed resources.

Question 20

Misery Index

Answer 20

Unofficial statistic that is the sum of monthly inflation and the unemployment rate