Unit 2

Question 1

Business cycle

Answer 1

Expansion peak contraction and trough

Question 2

Recession

Answer 2

Period of temporary economic decline defined by a fall in GDP

Question 3

Economic depression

Answer 3

Period of sustained, long-term downturn in economic activity in one or more economies

Question 4

Economic growth

Answer 4

Increase in the amount of goods produced per head of the population over a period of time

Question 5

GDP

Answer 5

Gross domestic product

GDP=C+I+G+(x-n)

Question 6

Intermediate goods

Answer 6

Product used to produce a final good or finished product

Question 7

Final goods

Answer 7

Product ready for sale used by the consumer

Question 8

Expenditure approach

Answer 8

Method for calculating GDP

Question 9

Income approach

Answer 9

Real estate value method that uses the income the property generates to estimate fair value

Question 10

Nonmarket transaction

Answer 10

Transactions covering goods or services that producers supply to others free or at very low prices

Question 11

Government purchases

Answer 11

Spending by federal state or local agencies with the exception of debt and social security

Question 12

Disposable personal income

Answer 12

After tax income

Question 13

Labor force

Answer 13

Sum of the employed and the unemployed

Question 14

Unemployment rate

Answer 14

Percentage of the labor force that is unemployed

Question 15

Labor force participation rate

Answer 15

Proportion of the labor force that is either working or looking for work

Question 16

Frictional unemployment

Answer 16

Unemployment existing due to people moving from one job to another

Question 17

Structural unemployment

Answer 17

Unemployment resulting from industrial reorganization due to tech changes rather than changes in supply or demand

Question 18

Cyclical unemployment

Answer 18

Impact on the economic recession or expansion on the total unemployment rate

Question 19

Discouraged workers

Answer 19

People who are eligible and able but not actively seeking work

Question 20

Full-employment real output

Answer 20

Production level when all available resources are used efficiently

Question 21

Natural rate of unemployment

Answer 21

Rate of unemployment arising from all sources except fluctuations in aggregate demand

Question 22

Consumer Price Index

Answer 22

Index of the variation in prices paid by typical consumers for retail goods

Question 23

Inflation

Answer 23

Rising aggregate level

Question 24

Deflation

Answer 24

Falling aggregate level

Question 25

Inflation rate

Answer 25

Annual percentage changed aggregate price level

Question 26

Real wages

Answer 26

Wages adjusted for inflation

Question 27

Nominal GDP vs Real GDP

Answer 27

Nominal is the total value of all goods quarterly or annually
Real GDP is nominal GDP adjusted for inflation

Question 28

GDP deflator

Answer 28

Measure of inflation

Ratio of value of goods and services at a current year to that of a base year