Podcast
Questions and Answers
What term describes recurring upswings and downswings in an economy's real GDP over time?
What term describes recurring upswings and downswings in an economy's real GDP over time?
Which sector is likely to be most affected by business cycle fluctuations?
Which sector is likely to be most affected by business cycle fluctuations?
What is the phase of the business cycle called when real GDP is declining?
What is the phase of the business cycle called when real GDP is declining?
What term identifies the phase of the business cycle where real GDP reaches a minimum?
What term identifies the phase of the business cycle where real GDP reaches a minimum?
Signup and view all the answers
Why does the production of durable goods fluctuate more than nondurable goods?
Why does the production of durable goods fluctuate more than nondurable goods?
Signup and view all the answers
In which phase of the business cycle does real GDP start to recover?
In which phase of the business cycle does real GDP start to recover?
Signup and view all the answers
Which statement is true regarding the nature of economic peaks?
Which statement is true regarding the nature of economic peaks?
Signup and view all the answers
What is the typical impact of a recession on consumer spending for durable goods?
What is the typical impact of a recession on consumer spending for durable goods?
Signup and view all the answers
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
Signup and view all the answers
What is the immediate cause of most business cycle variation, according to most economists?
What is the immediate cause of most business cycle variation, according to most economists?
Signup and view all the answers
What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
Signup and view all the answers
What tends to characterize producers of nondurables in the market?
What tends to characterize producers of nondurables in the market?
Signup and view all the answers
How might changes in total spending cause supply shocks?
How might changes in total spending cause supply shocks?
Signup and view all the answers
What is a common misconception regarding the role of prices in cyclical changes?
What is a common misconception regarding the role of prices in cyclical changes?
Signup and view all the answers
Which condition is least likely to occur during a recession?
Which condition is least likely to occur during a recession?
Signup and view all the answers
During which stage of the business cycle is total spending most likely to peak?
During which stage of the business cycle is total spending most likely to peak?
Signup and view all the answers
What is the formula for calculating the labor force?
What is the formula for calculating the labor force?
Signup and view all the answers
What defines a person as unemployed according to the provided content?
What defines a person as unemployed according to the provided content?
Signup and view all the answers
What does the labor force participation rate (LFPR) represent?
What does the labor force participation rate (LFPR) represent?
Signup and view all the answers
What is the formula for calculating the unemployment rate (UR)?
What is the formula for calculating the unemployment rate (UR)?
Signup and view all the answers
Under what circumstance is a person considered part-time employed?
Under what circumstance is a person considered part-time employed?
Signup and view all the answers
Which group is included in the labor force?
Which group is included in the labor force?
Signup and view all the answers
Which statement regarding part-time employment is true?
Which statement regarding part-time employment is true?
Signup and view all the answers
A discouraged worker is best described as?
A discouraged worker is best described as?
Signup and view all the answers
What is the labor force in the hypothetical economy of Scoob?
What is the labor force in the hypothetical economy of Scoob?
Signup and view all the answers
What is the unemployment rate in the hypothetical economy of Scoob?
What is the unemployment rate in the hypothetical economy of Scoob?
Signup and view all the answers
If the natural rate of unemployment in Scoob is 5 percent, what can be inferred about cyclical unemployment?
If the natural rate of unemployment in Scoob is 5 percent, what can be inferred about cyclical unemployment?
Signup and view all the answers
What type of unemployment does Sara represent after quitting her job to pursue an MBA degree?
What type of unemployment does Sara represent after quitting her job to pursue an MBA degree?
Signup and view all the answers
Which group is included in the labor force?
Which group is included in the labor force?
Signup and view all the answers
In Scoob, the total population is 145 million, with 95 million employed. How many are categorized as unemployed?
In Scoob, the total population is 145 million, with 95 million employed. How many are categorized as unemployed?
Signup and view all the answers
What is likely the reason for structural unemployment in Scoob if the economy's natural rate is 5 percent?
What is likely the reason for structural unemployment in Scoob if the economy's natural rate is 5 percent?
Signup and view all the answers
If the economy of Scoob is said to be at full employment, what does this imply?
If the economy of Scoob is said to be at full employment, what does this imply?
Signup and view all the answers
Inflation caused by increasing wages or rising per-unit production costs is known as what type of inflation?
Inflation caused by increasing wages or rising per-unit production costs is known as what type of inflation?
Signup and view all the answers
What is a consequence of cost-push inflation?
What is a consequence of cost-push inflation?
Signup and view all the answers
Which situation is most likely to contribute to cost-push inflation?
Which situation is most likely to contribute to cost-push inflation?
Signup and view all the answers
During which phase of the business cycle would you most likely experience demand-pull inflation?
During which phase of the business cycle would you most likely experience demand-pull inflation?
Signup and view all the answers
What does core inflation measure?
What does core inflation measure?
Signup and view all the answers
What happens to real income if a person's nominal income rises from $10,000 to $12,000 while the CPI increases from 100 to 105?
What happens to real income if a person's nominal income rises from $10,000 to $12,000 while the CPI increases from 100 to 105?
Signup and view all the answers
What is the purpose of cost-of-living adjustment clauses (COLAs)?
What is the purpose of cost-of-living adjustment clauses (COLAs)?
Signup and view all the answers
Study Notes
Business Cycles
- Recurring upswings and downswings in an economy's real GDP over time are called business cycles.
- Businesses cycles affect capital goods and durable consumer goods the most.
Phases of Business Cycles
- The peak is the phase when real GDP is at a maximum.
- Expansion is the phase when real GDP is increasing.
- Recession is the phase when real GDP is decreasing.
- Trough is the phase when real GDP is at a minimum.
Causes of Business Cycles
- Most economists agree that the immediate cause of most business cycle variation is an unexpected change in the level of total spending.
Unemployment Rates
- The labor force includes employed workers and persons who are officially unemployed.
- Discouraged workers are those who are not actively searching for a job.
- The labor force participation rate (LFPR) equals the labor force divided by the adult population.
- The unemployment rate (UR) equals the number of unemployed people divided by the labor force.
- The natural rate of unemployment is the unemployment rate that exists when the economy is at full employment.
- It is the sum of frictional, structural, and cyclical unemployment.
- Frictional unemployment is the unemployment that occurs when workers are between jobs.
- Structural unemployment is the unemployment that occurs when there is a mismatch between the skills of workers and the jobs available.
- Cyclical unemployment is the unemployment that occurs during recessions.
Inflation
- Inflation is a sustained increase in the general price level of goods and services in an economy over a period.
- Demand-pull inflation occurs when there is too much money chasing too few goods.
- Cost-push inflation occurs when the costs of production increase.
- Inflation can be measured using the consumer price index (CPI), which measures the change in the price of a basket of goods and services.
- Real income is nominal income adjusted for inflation.
- The rule of 70 states that the number of years it takes for the price level to double is approximately 70 divided by the annual inflation rate.
- Hyperinflation is a rapid and uncontrolled increase in the price level.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Explore the dynamics of business cycles and how they affect the economy, including the phases of ups and downs in real GDP. Learn about unemployment rates, labor force participation, and the impact of spending changes on economic fluctuations.
