Podcast
Questions and Answers
What term describes the recurring upswings and downswings in an economy's real GDP over time?
What term describes the recurring upswings and downswings in an economy's real GDP over time?
- Recessions
- Output yo-yos
- Total product oscillations
- Business cycles (correct)
Which sector is likely to be most affected by business cycle fluctuations?
Which sector is likely to be most affected by business cycle fluctuations?
- Agricultural commodities
- Capital goods and durable consumer goods (correct)
- Textile products
- Military goods
Which phase of the business cycle occurs when real GDP declines?
Which phase of the business cycle occurs when real GDP declines?
- An expansion
- A recession (correct)
- The peak
- The trough
What is the name of the phase in the business cycle where real GDP is at its minimum?
What is the name of the phase in the business cycle where real GDP is at its minimum?
Why does the production of durable goods vary more than the production of nondurable goods?
Why does the production of durable goods vary more than the production of nondurable goods?
During which phase is the economy considered to be experiencing full employment?
During which phase is the economy considered to be experiencing full employment?
In terms of economic activity, what is most affected by fluctuations in the business cycle?
In terms of economic activity, what is most affected by fluctuations in the business cycle?
What typically signals the transition from recession to recovery in the business cycle?
What typically signals the transition from recession to recovery in the business cycle?
What is included in the labor force?
What is included in the labor force?
How is the labor force participation rate (LFPR) calculated?
How is the labor force participation rate (LFPR) calculated?
What defines an unemployed person?
What defines an unemployed person?
What does the unemployment rate (UR) represent?
What does the unemployment rate (UR) represent?
When is a part-time worker considered employed?
When is a part-time worker considered employed?
Which situation might lead to an understated unemployment rate?
Which situation might lead to an understated unemployment rate?
What happens to discouraged workers in terms of labor statistics?
What happens to discouraged workers in terms of labor statistics?
Which formula represents the actual unemployment rate?
Which formula represents the actual unemployment rate?
What is hyperinflation characterized by?
What is hyperinflation characterized by?
How is the Consumer Price Index (CPI) calculated?
How is the Consumer Price Index (CPI) calculated?
What does a higher Actual Rate of Unemployment relative to the Natural Rate indicate?
What does a higher Actual Rate of Unemployment relative to the Natural Rate indicate?
If the potential Real GDP is $200 billion and the actual rate of unemployment is 12%, what is the output being forgone if Okun's law applies?
If the potential Real GDP is $200 billion and the actual rate of unemployment is 12%, what is the output being forgone if Okun's law applies?
What is meant by the term 'demand-pull inflation'?
What is meant by the term 'demand-pull inflation'?
Which of the following is NOT a method for calculating inflation?
Which of the following is NOT a method for calculating inflation?
What does the formula for calculating inflation involve?
What does the formula for calculating inflation involve?
In which year will the price of pizza equal $12 when the price in 2020 was $10?
In which year will the price of pizza equal $12 when the price in 2020 was $10?
Who is least likely to be hurt by unanticipated inflation?
Who is least likely to be hurt by unanticipated inflation?
Inflation affects which of the following?
Inflation affects which of the following?
If the nominal interest rate is 5 percent and the real interest rate is 2 percent, what is the inflation premium?
If the nominal interest rate is 5 percent and the real interest rate is 2 percent, what is the inflation premium?
In the expansion phase of a business cycle, what typically occurs?
In the expansion phase of a business cycle, what typically occurs?
Which of the following is the correct formula to calculate the unemployment rate?
Which of the following is the correct formula to calculate the unemployment rate?
What is frictional unemployment?
What is frictional unemployment?
Which type of unemployment lasts longer and is associated with acquiring new skills?
Which type of unemployment lasts longer and is associated with acquiring new skills?
What does full employment refer to?
What does full employment refer to?
Frictional unemployment is also known as?
Frictional unemployment is also known as?
What kind of unemployment is part of the natural rate of unemployment?
What kind of unemployment is part of the natural rate of unemployment?
Which of the following is not a characteristic of structural unemployment?
Which of the following is not a characteristic of structural unemployment?
What is the implication of an economy said to be at full employment?
What is the implication of an economy said to be at full employment?
How does frictional unemployment primarily arise?
How does frictional unemployment primarily arise?
Study Notes
Business Cycle
- Business cycles are recurring upswings and downswings in an economy's real GDP over time.
- The phase of the business cycle where real GDP declines is called a recession.
- The phase of the business cycle where real GDP is at a minimum is called the trough.
Unemployment
- Frictional unemployment is the portion of unemployment that rises from the normal turnover of employees.
- Structural unemployment is the portion of unemployment that arises from the change in economic structure.
- Full employment occurs when the economy is producing its potential output or potential GDP, which is the sum of structural and frictional unemployment.
Inflation
- Inflation is an increase in the overall price level.
- Deflation is a decrease in the overall price level.
- Hyperinflation is a period of a very rapid increase in the price level.
- Inflation reduces the purchasing power of money.
- The Consumer Price Index (CPI) measures the overall cost of goods and services purchased by a consumer.
- Demand-pull inflation occurs when the demand for goods and services exceeds the economy's ability to produce them.
Okun's Law
- Okun's Law states that for every 1% increase in the unemployment rate, there is a 2% decrease in output.
- The text provides an example of Okun's Law: If the natural rate of unemployment is 6% and the actual rate of unemployment is 12%, then the amount of output being forgone by the economy is 12%.
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Description
Test your knowledge on key economic concepts such as the business cycle, unemployment types, and inflation. This quiz covers the definitions and implications of recession, full employment, and variations in inflation. Perfect for students studying introductory economics.
