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The Business Cycle
| Term | Definition |
|---|---|
| A nation is said to be at 'full employment' when their national unemployment rate is... | 5% or less |
| When GDP drops for 8-12 months straight and national income is declining, the nation's economy is said to be in a _______. | recession |
| When GDP drops for 16 or more months straight, a nation's economy is said to be in a _______. | depression |
| The worst downturn in US economic history was triggered by the 1929 stock market crash. What was this event called? | The Great Depression |
| In what decade did the Great Depression occur? | 1930's |
| This type of unemployment is caused by a change in the economy that reduces demand for workers and their skills. | structural unemployment |
| This type of unemployment occurs when workers are between jobs or are waiting to start new ones. | frictional unemployment |
| This kind of unemployment is related to changes in the business cycle. | cyclical unemployment |
| This kind of unemployment is caused by changes in the weather or demand for certain goods & services. | seasonal unemployment |
| How is the unemployment rate calculated? | number of unemployed people divided by the number of civilian employed people |
| Alternating periods of economic growth & decline is called the _______. | business cycle |
| This is an abnormal type of inflation in excess of 500% per year; it is the last stage before financial collapse. | hyperinflation |
| This is a relatively low rate of inflation, usually 1 to 3% a year. | creeping inflation |
| A rise in the general level of prices is called... | inflation |
| What is the difference between a recession & a depression? | A depression is longer and more severe than a recession. |
| What 2 devices are used to predict future economic activity? | econometric models and the index of leading indicators |
| What are the 2 phases of the business cycle? | expansion and contraction |
| In which part of the business cycle is GDP and inflation at their lowest points and unemployment is at its highest point? | trough |
| In which part of the business cycle is GDP and inflation at their highest points & unemployment is at its lowest point? | peak |
| In which part of the business cycle is GDP and inflation rising and unemployment is falling? | expansion phase |
| In which part of the business cycle is GDP and inflation falling, while unemployment is rising? | contraction phase |
| This theory says inflation is caused by too much demand; it more or less blames consumers. | demand-pull theory |
| This theory says inflation is caused by land, labor, and capital getting more expensive for producers. | rising cost of inputs |
| This theory of inflation says inflation is caused by too much money in circulation; this is the most popular theory for the cause of inflation. | excessive monetary growth |
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lesterstoffels
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