Chapter 13 Vocabulary

Question 1

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

Answer 1

Business Cycles

Question 2

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

Answer 2

Business Fluctuations

Question 3

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

Answer 3

Recession

Question 4

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

Answer 4

Expansion

Question 5

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

Answer 5

Trend Line

Question 6

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

Answer 6

Depression

Question 7

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

Answer 7

Leading Economic Indicator

Question 8

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

Answer 8

Dow Jones Industrial Average (DJIA)

Question 9

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

Answer 9

Inflation

Question 10

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

Answer 10

Deflation

Question 11

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

Answer 11

Consumer Price Index (CPI)

Question 12

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

Answer 12

Market Basket

Question 13

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

Answer 13

Hyperinflation

Question 14

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

Answer 14

Producer Price Index (PPI)

Question 15

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

Answer 15

Demand-Pull Inflation

Question 16

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

Answer 16

Cost-Push Inflation

Question 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.

Answer 17

Unemployed

Question 18

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

Answer 18

Outsourcing

Question 19

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

Answer 19

GDP Gap

Question 20

unofficial statistic that is the sum of monthly inflation and the unemployment rate.

Answer 20

Misery Index