Chapter 3

Question 1

What is Macroeconomics

Answer 1

refers to the economy as a whole and how it will have a direct impact on business

Question 2

What are the business cycles

Answer 2

Boom
Downturn
Recession
Recovery

Question 3

What is downturn

Answer 3

The economy starts to slow down

Question 4

What is boom

Answer 4

the economy is growing and unemployment is low

Question 5

What is recession

Answer 5

The economy slows down to the point it shrinks leading to high unemployment

Question 6

What is recovery

Answer 6

The economy starts to recover due to interest rates being lowered- allowing businesses to invest = new jobs= increase in employment

Question 7

Causes of inflation

Answer 7

Demand-pull
cost-push inflation

Question 8

What is demand-pull inflation

Answer 8

Demand increases and businesses cannot keep up leading to price to increase

Question 9

What is cost-push inflation

Answer 9

When the supply of goods and services decreases leading to an increase in production costs- leading to price to increase