Economic Fluctuations Flashcards
True or false. Until the 1970s, inflation rates in the United States tended to be low and growth was slow and unemployment was high.
True
Economy experience a slow growth, high unemployment, and high inflation all at once.
Stagnation
And observed and repeated pattern of the ups and downs in output, employment, and prices.
Business cycle
Which phase of the business cycle shows output increasing, prices rising rapidly, and unemployment falling?
Expansionary phase
Government actions design to smooth out ups and downs and output, employment, and prices.
Stabilization policy
What phase of the business cycle shows a downturn of output that continues for two consecutive quarters?
Recession
What phase of the business cycle shows the upturn from trough to peak?
Expansion
The recession of 1929 to 1939 was so severe it was given what special name?
The great depression
A very severe economic downturn
Depression
True or false. President Harry Truman once said that when your neighbor is out of work, that’s a recession; but when you lose your job, that’s a depression.
True
A situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains high.
Stagflation
The United States is in a recession if
1) The gross domestic product (GDP – real output) declines for two successive quarters
2) nominal output declines for two successive quarters
3) The price level falls in 2 successive quarters
4) unemployment rises in 2 successive quarters
The GDP declines for two successive quarters
A negative growth of the GDP or gross domestic product for two consecutive quarters marks the start of a recession.
True or false. I wore in the middle is that affects the US stable economy could cause a contraction.
True
True or false. A contraction means that the economic activity has increased.
False
A contraction means that the economic activity has slowed down.
True
True or false. During the great recession of 2007 to 2009 do United States experienced decreasing unemployment and a high rate of inflation.
False
True or false. During the great recession of 2007 to 2009 the United States experienced increasing unemployment and a low rate of inflation.
True
Over time, there is a tendency for
1) . Major macroeconomic variables to move together in a predictable way
2) inflation and unemployment to increase simultaneously
3) major macroeconomic variables to behave unpredictably
4) productivity and unemployment to increase simultaneously
Major macroeconomic variables to move together in a predictable way
Economists use the phrase “business cycle” when discussing
1) movements in interest rates
2) fluctuations in aggregate measures of economic output or income
3) fluctuations in employment
4) changes in economic productivity
Fluctuations in aggregate measures of economic output or income
Aggregate measures of economic output and incomes are what define the business cycle.
During the expansionary phase of the business cycle, it is likely that real income will
1) increase, the price level will decrease, and the unemployment rate will decrease
2) increase, the price level will increase, and the unemployment rate will decrease
3) increase, the price level will increase, and the unemployment rate will increase
4) decrease, the price level will increase, and the unemployment rate will increase
Increase, the price level will increase, and the unemployment rate will decrease.
What are the turning point of the business cycle called
Peaks and troughs
Put the following for phases of the business cycle in the correct order.
Expansion
Recession
Trough
Peak
The correct order is peak, recession, trough, expansion
The longest contractionary period in the US was
1) The Great Recession
2) . The double dip recession of the early 1980s
3) The Great Depression
4) The recession in the 1990s
The great depression
The great depression lasted 10 years from 1929 to 1939.
Since World War II the highest unemployment rate during a downturn was
1) 10.0%
2) 10.8%
3) 25%
The correct answer is 10.8%. This occurred in October 1982.
