Economic Change Analysis Flashcards
Changes that have a long term, consistent direction can be called a what?
Trend
A long term trend is made up of short term WHAT?
Fluctuations. Think of a graph showing the jagged fluctuations of short term changes with a smooth trend line overlapping it.
Name some examples of long term trends in the United States
Rising prices of residential housing, mechanization of production from 19th to the 20th century, a shift from goods production to a service economy in the second half of the 20th Century
When economic activity go up and down rather than grow or decline steadily, they are said to WHAT
fluctuate
What are the four kinds of economic fluctuations?
1.) Periodic 2.) Irregular, 3.) Random, 4.) Cyclical
Predictable (in duration and time of year), regular market fluctuations (like “back to school sales” or Christmas Season, or summer tourist season for oceanside communities) are called what?
Periodic
A fluctuation that occurs as a result of an unpredictable event (war, pandemics, crop failures) or when a particular product may be unexpectedly popular causing a manufacture shortage is called a WHAT?
random fluctuation
The Olympics causes a short term boom for a local economy. What type of economic fluctuation would this be?
Irregular
When a fluctuation is predictable, but not a regular occurrence, what type of fluctuation is it?
irregular
What type of fluctuations can be loosely predicted? The sequence of expansion, contraction, and revival is recurrent over many years, but not consistent in length and not exact in time of occurrence
Business Cycle Fluctuation
A generally defined business cycle contains four components. What are they?
Contraction, recession, expansion, and peak
When looking at a graph of a business cycle, there are many fluctuations that make up the whole. What are bottom points of each small fluctuation segment called? Where a contraction becomes an expansion?
Trough
When looking at a graph of a business cycle, there are many fluctuations that make up the whole. What are top points of each small fluctuation segment called? Where an expansion becomes a contraction?
Peaks
the segment of a curve in a business cycle that reflects decline in economic activity is called WHAT
Contraction
the segment of a curve in a business cycle that reflects a rise in economic activity is called WHAT
expansion
What is an upper turning point vs a lower turning point in an economic cycle?
The Upper turning point is the point in which the contraction begins and the lower turning point is when expansion begins
What does an amplitude measure?
the highness and lowness – the difference between a trough and a peak on a business cycle graph.
By measuring amplitude and duration within a business cycle, one can identify 5 common economic conditions. What are there?
Recession, Depression, Recovery, Prosperity, and Boom
When there are two successive quarters of contraction, this economic condition is called a WHAT?
Recession
What economic condition is characterized by cautious spending and increase in savings or a decline in GDP?
Recession
When unemployment is high and production is very slowed down, this economic condition is called WHAT?
Depression
When an economy begins to bounce back after a depression or recession it’s called what?
Recovery
High employment, productivity, and income combine to create a sense of stability in the market called WHAT
prosperity
A period of unusually strong demand for goods and services accompanied by rapidly rising prices is called what?
Boom
An economy in a state of intoxication where there is an illusion of limitless opportunity is called what?
Booming economy - think Gold Rush.
What are common economic indicators used to judge the condition of overall economic health? Quarterly and monthly measurements of WHAT?
GDP, employment, income, and spending. Level of activity in the housing construction industry,
Why is full employment an indicator of impending inflation?
The conventional view is that full-employment can lead to inflationary pressures within an economy. As more people have purchasing power, demand for goods and services grows, leading to demand outpacing supply (demand-pull inflation). And increasing demand drives prices up too - leading to cost-push inflation (sellers know there is a lack of alternatives, so they can raise prices just to raise them).
Why are population shifts an early warning indicator for economic health?
If a military base closes in a town, the town will be devastated by the removal of such an enormous employment and consumption factor of the local economy
What is a good economic indicator for judging whether the housing market is robust or soft? And why?
Home repairs. In downturns repair businesses flourish since people may have enough money to repair their home, they don’t have enough for big ticket items like cars or houses.
What are Leading VS. Lagging VS. Coincident indicators
In data collection, some data indicators reflect present state of the economy (Coincident), some trail the business cycle continuing to rise after the downturn has started (lagging) and some warn far in advance (leading)
Who published a monthly composite index based on 11 economic indicators?
Dept. of Commerce
A monetary measure of the value of all final goods and services produced in the economy during a year is called WHAT?
GNP
What does GDP measure?
Individual consumption, investment spending, government spending, and net exports
The point on a business cycle at which a decline in economic activity reaches bottom is referred to as WHAT?
the lower turning point
in a business cycle, the period between two peaks is referred to as what?
a duration
Which of the major economic indicators using a “market basket” of consumer goods?
CPI
The gross national product is commonly known as A.) the national debt, B.) the notional income or C.) the total output of all goods and services produced
B.)national income
In GDP analysis, a refrigerator would be considered which of the following and why? A) Durable goods, B.) nondurable goods, C.) investment spending
A.) Durable goods because it should last more than 3 years.
Which of the following stock market indicators relies on a sample of 100 non financial domestic companies across industries? A.) Dow Jones, B.) Nasdaq, C.) Wilshire, D.) American
B>) Nasdaq 100
