Chapter 12

Question 0

Boom

Answer 0

A period of economic expansion

Question 1

Business-cycles, economic fluctuations or business fluctuations

Answer 1

Alternating periods of economic expansions and contractions

Question 2

Bust

Answer 2

A period of economic contraction

Question 3

Trough

Answer 3

The lowest point in the business cycle

Question 4

Depression

Answer 4

An economic period characterized by low economic activity and severe unemployment

Question 5

Expansion or recovery

Answer 5

The phase of the business cycle characterized by an increase in employment, income, and economic activity in general

Question 6

Peak

Answer 6

The phase of the business cycle in which economic activity has reached its highest point

Question 7

Recession

Answer 7

A phase of the business cycle characterized by a general downsizing in economic activity

Question 8

Inventory cycles

Answer 8

Economic fluctuations caused by changes in inventory investment

Question 9

Acceleration principle or accelerator

Answer 9

The theory that an increase in income leads to an accelerated increase in investment

Question 10

Capital-output ratio

Answer 10

The ratio of the value of capital stock to the value of annual output

Question 11

Political business cycle

Answer 11

A business cycle that is caused by changes in government spending and taxes to achieve political rather than economic ends

Question 12

Real business cycle

Answer 12

The theory that the business cycle is caused by supply-side shocks

Question 13

Leading indicators

Answer 13

Economic variables that turn downward before the cycle peak and upward before the trough

Question 14

Coincidental indicators

Answer 14

Variables that coincide exactly with the business cycle

Question 15

Lagging indicators

Answer 15

Variables that turn downward after the peak and upward after the trough