ECON 2010 Chapter : Econ2010Chapter10

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azuremammoth471

15 Mar 2019

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Business cycles are short term fluctuations in gdp and other variables. A recession is a period in which the economy is growing at a rate significantly below normal. A period in which the gdp falls for two or more quarters. A period in which real gdp growth is well below normal, even if not negative. A peak is a beginning of a recession. A trough is the end of a recession. An expansion is a period in which the economy is growing at a rate significantly above normal. A boom is a strong and long lasting expansion. Cynical unemployment rises sharply during recessions real wages grow more slowly for those employed. New labor market entrants have difficulty finding work. Production of durable goods is more volatile than services and non-durable goods. Potential output, y*, is the maximum sustainable amount of output that an economy can produce.

Related Questions

1. Fiscal policy attempts to affect the level of overall spendingin the economy by changes in:
A) the interest rate.
B) the money supply.
C) banking regulations.
D) taxes and spending.

2. Economists have identified several consecutive months of fallingemployment and forecasts for the next few months are for more ofthe same. At what point in the business cycle is the economyapparently located?
A) recession
B) expansion
C) business cycle peak
D) business cycle trough

3. The onset of the Great Depression:
A) was not a shock to anyone since most economists predicted theâroaring 20sâ were bound to end in disaster.
B) created a disagreement between the Hoover administration andconventional economists because Hoover wanted the government tointervene much more quickly than most others.
C) came as a considerable shock to the conventional wisdom ofeconomics at that time and opened the door for critiques ofmainstream thought by economists like JM Keynes.
D) was in 1918 at the end of World War I.

4. When economists measure economic growth, they often use:
A) the inflation rate.
B) the unemployment rate.
C) nominal GDP.
D) real GDP.

5. In a typical business cycle, the business cycle peak isimmediately followed by the:
A) recession.
B) business cycle trough.
C) expansion.
D) depression.

6. Suppose an economy experiences rising total output accompaniedby increasing employment, this is generally known as:
A) stagflation.
B) recession.
C) inflation.
D) expansion.

7. Controlling interest rates is an example of:
A) fiscal policy.
B) tax policy.
C) monetary policy.
D) exchange rate policy.

8. The alternation between recessions and expansions is known asthe:
A) unemployment rate.
B) long-run economic growth.
C) business cycle.
D) macroeconomy.

9. A recession in America is typically associated with:
A) a falling unemployment rate.
B) a decrease in the number of people living in poverty.
C) a decrease in the percentage of Americans with healthinsurance.
D) an increase in corporate profits.

10. The purpose of macroeconomic policy is to:
A) bring unemployment closer to the natural rate.
B) reduce the severity of recessions.
C) rein in excessively strong expansions.
D) bring unemployment closer to the natural rate and to reduce theseverity of recessions.

11. The trade balance is the difference between the value ofthe:
A) trade deficit and the budget deficit.
B) goods and services that one country sells to other countries andthe value of the goods and services it buys in return.
C) exchange rates of two countries that are engaged ininternational trade.
D) national debt and the foreign debt.

12. Increasing the total amount of available productive resourcesis the focus of __________.
A) macroeconomics
B) fiscal policy
C) monetary policy
D) microeconomics

13. The point on a business cycle when real GDP stops rising andbegins falling is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

14. During a recession, one will often observe:
A) aggregate output rising.
B) unemployment rates will be increasing while aggregate output isfalling.
C) employment rates will be rising.
D) zero unemployment rates.

15. Monetary policy involves:
A) changes in government spending.
B) changes in government tax receipts.
C) changes in the quantity of money.
D) changes in tax rates.

16. The trough of the business cycle:
A) comes right after the expansion phase.
B) comes before the recession phase.
C) is a temporary maximum level of real GDP.
D) is a temporary minimum level of real GDP.

17. Which one of the following statements about the U.S. economy isnot accurate?
A) Since the Second World War, aggregate output grew at a ratelower than the average annual growth rate of population.
B) Since the Second World War, aggregate output grew at a ratehigher than the average annual growth rate of population.
C) Since the Second World War, macroeconomic policy has helped makethe economy more stable.
D) Long-run growth per capita is the key to higher wages and arising standard of living.

18. An economic recovery is all of the following except:
A) economic growth of a sustained nature.
B) a short-run increase in aggregate production in aneconomy.
C) a time of increasing employment.
D) the end of the business cycle.

19. Which of the following would NOT be classified as amacroeconomic question?
A) How many people are employed in the economy as a whole?
B) What determines the overall level of prices in the economy as awhole?
C) What determines the overall trade in goods, services, andfinancial assets between the United States and the rest of theworld?
D) What determines the cost to a university or college of offeringa new course?

20. Which of the following statements regarding price level orinflation is correct?
A) Supply and demand can not explain why a particular good orservice becomes more expensive relative to other goods andservices.
B) Inflation affects only the more advanced countries whereas lessadvanced countries face deflation.
C) Prices of most goods and services remained stable during thegreat depression.
D) In general, when the economy is in recession and jobs are hardto find, inflation tends to fall.

21. If wages grew at a 5% rate last year and average prices grew ata 3% rate, then the average worker is:
A) better off.
B) worse off.
C) no better or worse off.
D) unaffected.

22. In an open economy:
A) the exchange rate is determined by the government.
B) specialization in activities with a comparative advantage is notpossible.
C) trade is only beneficial to the relatively larger economy.
D) there is trade in goods, services, or assets with othercountries.

23. Changes in government spending and taxes in an effort to changeoverall spending in an economy is:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.

24. If an economy is open, this means that:
A) anyone can immigrate to the country.
B) trading with other countries makes up a portion of itseconomy.
C) it does not trade with other countries.
D) it will experience a drop in its real GDP.

25. Inflation is a situation where:
A) the average price level falls.
B) the average price level increases.
C) the average price level becomes negative.
D) the real price level falls.

26. The topics studied in macroeconomics include:
A) the price of a motorcycle.
B) the wages of engineers.
C) the average price level in the economy.
D) how much ice cream consumers buy.

27. A period of rising real GDP is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

28. The modern tools of macroeconomic policy are:
A) tax policy and antitrust policy.
B) fiscal policy and monetary policy.
C) monetary policy and exchange rate policy.
D) capital policy and labor policy.

29. A ârubber neckingâ traffic jam is an example of:
A) microeconomics in action.
B) individual behavior that has a large aggregate impact.
C) the paradox of thrift.
D) an outcome smaller than the sum of its parts.

30. The most painful consequence of a recession is:
A) rising unemployment.
B) increasing inflation.
C) increasing aggregate output.
D) higher interest rates.

31. Per capita economic growth is:
A) economic growth per unit of capital.
B) economic growth per person.
C) economic expansion over the business cycle.
D) sustained increase in aggregate output.

32. Keynesian economics stressed:
A) total spending.
B) the self-regulating power of free markets.
C) the long run.
D) that the Depression should run its course to bring down the highcost of living.

33. When an economy's overall production grows faster than itspopulation, this is referred to as:
A) long-run growth per capita.
B) an increase in nominal GDP.
C) deflation.
D) the paradox of thrift.

34. Fiscal policy attempts to affect the overall level of spendingin the economy through:
A) changes in the inflation rate.
B) changes in the quantity of money or the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.

35. With regard to the aggregate price level, economists generallybelieve:
A) price stability is a desirable goal.
B) inflation is worse than deflation.
C) deflation is worse than inflation.
D) inflation actually benefits most retired people.

36. Recessions are periods when:
A) output rises.
B) the aggregate price level rises.
C) the unemployment rate is falling.
D) output and employment are falling.

37. Monetary policy attempts to affect the overall level ofspending in the economy by changes in:
A) taxes.
B) taxes and spending.
C) taxes and interest rates.
D) interest rates and the quantity of money.

38. The basic difference between an economic recession and economicdepression is that:
A) the latter is a shorter economic downturn than the former.
B) during recessions output falls faster than duringdepressions.
C) during depressions employment falls faster than duringrecessions.
D) the former is a longer economic downturn than the latter.

39. The central mission of modern macroeconomics is to prevent_____ from happening again.
A) recessions
B) inflation
C) deflation
D) anything like the Great Depression

40. Fiscal policy refers to:
A) the control of interest rates.
B) the control of government spending and taxations.
C) the control of the quantity of money.
D) the control of interest rates and of government spending.

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16. Investment () includes:

A. The amount spent on new factories and machinery.

B. The amount spent on stocks and bonds.

C. The amount spent on consumer goods that last more than one year.

D. The amount spent on purchases of art.

17. Which of the following is true?

A. A depression is a recession that is mild and relatively brief.

B. The expansions and contractions of real-world business cycles last varying lengths of time and often differ in magnitude.

C. The timing of business fluctuations is regular and therefore easily predictable

D. During the contractionary phase of the business cycle, the rate of unemployment is generally quite low

18. If imports exceed exports, as in recent years, then exists

A. A trade surplus.

B. A trade deficit.

C. A trade imbalance.

D. Trade disequilibrium.

19. which can be approximated by the growth of the gross domestic product, ultimately determines the prevailing standard of living in a country

20. The difference between nominal GDP and real GDP is:

A. Nominal GDP measures actual productivity.

B. Nominal GDP adjusts for inflation.

C. Real GDP adjusts for inflation.

D. Real GDP excludes imports and exports.

silverhamster62

TRUE or FALSE?

1. Real GDP can never be greater than potential GDP.

2. When foreign countries experience an increase in income, this is likely to increase our GDP.

3. The United States economy spends about as many months in recession as it spends in expansion.

4. If individuals decrease their consumption spending then this is likely to reduce the growth rate of GDP, all else the same.

5. Movements of real GDP around potential GDP are called the business cycle.

6. If total government spending in a given year was $3.7 trillion, then all of this spending counted directly in GDP as part of the government spending (G) category.

7. The last recession in the United States began in December of 2007.

8. During a recession, the inflation rate tends to decline.

9. Changes in spending that cause firms to change their level of production of goods/services are called supply shocks.

10. All else the same, an increase in income in the United States leads to a decrease in our net exports.

11. Since 1929 there have been 14 declared recessions in the United States.

12. Total spending in the economy is equal to consumption + investment + government spending - net exports.

13. During each recession, potential GDP falls.

14. Percentage wise, the government collects more tax from individuals than it does from firms.

15. During a recession, the Federal Reserve pursues contractionary monetary policy.

16. During a recession, the Federal Reserve is most likely to sell government bonds to the public.

17. Investment spending increases during periods of recession.

18. Congress meets about every 6 - 8 weeks to discuss the performance of the economy and potential changes to fiscal policy.

19. If there is more competition among firms, then the inflation rate will tend to increase.

20.The demand for labor increases when the economy is in an expansionary phase.

21. Total spending by the government is about 20% of GDP in the US economy.

22. The unemployment rate decreases during periods of expansion.

23. If oil prices increase by 20% then this is an example of a supply shock.

24. When the Federal Reserve buys government bonds, interest rates are likely to fall.

25. If Congress wanted to help the economy out of a recession, they would be most likely to reduce government spending and/or increase taxes.

Falsenot in accordance with the fact or reality or actualityMore (Definitions, Synonyms, Translation)

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ECON 2010 Chapter : Econ2010Chapter10

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