Understanding Business Cycles Flashcards
Based on typical labour utilisation patterns across the business cycle, productivity (output per hours worked) is most likely to be highest:
A. at the peak of a boom.
B. into a maturing expansion.
C. at the bottom of a recession.
C. at the bottom of a recession.
As the expansion phase of the business cycle advances from early stage to late stage, businesses most likely experience a decrease in:
A. labor costs.
B. capital investment.
C. availability of qualified workers.
C. availability of qualified workers.
An analyst writes in an economic report that the current phase of the business cycle is characterized by accelerating inflationary pressures and borrowing by companies. The analyst is most likely referring to the:
A. peak of the business cycle.
B. contraction phase of the business cycle.
C. early expansion phase of the business cycle.
A. peak of the business cycle.
The indicator indexes created by various organizations or research agencies:
A. include only leading indicators to compute their value.
B. are highly reliable signals on the phase of business cycles.
C. evolve over time in terms of composition and computation formula.
C. evolve over time in terms of composition and computation formula.
Which one of the following trends in various economic indicators is most consis. tent with a recovery from a recession?
A. A declining inventory-sales ratio and stable industrial production index
B. A rising broad stock market index and unit labor costs turning from increasing to decreasing
C. A decrease in average weekly initial claims for unemployment insurance and an increase in aggregate real personal income
C. A decrease in average weekly initial claims for unemployment insurance and an increase in aggregate real personal income
Which of the following statements gives the best description of nowcasting?
A. This method is used to forecast future trends in economic variables based on their past and current values.
B. This method is used for real-time monitoring of economic and financial variables to continuously assess current conditions and provide an estimate of the current state.
C. This method is used to study past relationships between variables to determine which ones have explained the path of a particular variable of interest.
B. This method is used for real-time monitoring of economic and financial variables to continuously assess current conditions and provide an estimate of the current state.
Which of the following statements is the best description of the characteristics of
economic indicators?
A. Leading indicators are important because they track the entire economy.
B. Lagging indicators, in measuring past conditions, do not require revisions.
C. A combination of leading and coincident indicators can offer effective forecasts.
C. A combination of leading and coincident indicators can offer effective forecasts.
When the spread between 10-year US Treasury yields and the short-term federa. funds rate narrows and at the same time the prime rate stays unchanged, this mix of indicators most likely forecasts future economic:
A. growth.
B. decline.
C. stability.
B. decline.
Current economic statistics indicating little change in services inflation, rising residential building permits, and increasing average duration of unemployment are best interpreted as:
A. conflicting evidence about the direction of the economy.
B. evidence that a cyclical upturn is expected to occur in the future.
C. evidence that a cyclical downturn is expected to occur in the future.
B. evidence that a cyclical upturn is expected to occur in the future.
If relative to prior values of their respective indicators, the inventory-sales ratio has risen, unit labor cost is stable, and real personal income has decreased, it is most likely that a peak in the business cycle:
A. has occurred.
B. is just about to occur.
C. will occur sometime in the future.
A. has occurred.
When aggregate real personal income, industrial output, and the S&P 500 Index all increase in a given period, it is most accurate to conclude that a cyclical upturn is:
A. occurring.
B. about to end.
C. about to begin.
A. occurring.
Which of the following is most likely to increase after an increase in aggregate real personal income?
A. Equity prices
B. Building permits for new private housing units
C. The ratio of consumer installment debt to income
C. The ratio of consumer installment debt to income
Which of the following indicators is most appropriate in predicting a turning point in the economy?
A. The Industrial Production Index
B. The average bank prime lending rate
C. Average weekly hours, manufacturing
C. Average weekly hours, manufacturing
The unemployment rate is considered a lagging indicator because:
A. new job types must be defined to count their workers.
B. multiworker households change jobs at a slower pace.
C. businesses are slow to hire and fire due to related costs.
C. businesses are slow to hire and fire due to related costs.
During an economic recovery, a lagging unemployment rate is most likely attributable to:
A. businesses quickly rehiring workers.
B. new job seekers entering the labor force.
C. underemployed workers transitioning to higher-paying jobs.
B. new job seekers entering the labor force.
