Principles of Economics: Business Cycle and Unemployment
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Questions and Answers

What is the definition of economic growth?

  • A decrease in real GDP per capita over a certain time period
  • An increase in real GDP or real GDP per capita over a certain time period (correct)
  • A fluctuation in real GDP with no pattern over a certain time period
  • A steady level of real GDP over a certain time period

    • What is the formula to calculate the rate of economic growth?

  • New RGDP / Old RGDP * 100
  • Old RGDP / New RGDP * 100
  • Old RGDP - New RGDP / New RGDP * 100
  • New RGDP - Old RGDP / Old RGDP * 100 (correct)

    • What is the rule of 70 used to approximate?

  • The number of years required to increase real GDP by 10%
  • The number of years required to double real GDP (correct)
  • The number of years required to halve real GDP
  • The number of years required to triple real GDP

    • What is the result of a decline in real GDP?

    <p>A significant increase in unemployment</p> Signup and view all the answers

    What is the term used to describe the alternating rises and declines in the level of economic activity?

    <p>The business cycle</p> Signup and view all the answers

    What is the outcome of rapid economic growth?

    <p>Rapid inflation</p> Signup and view all the answers

    What is the characteristic of the economy during the peak phase of the business cycle?

    <p>The economy is at full employment and the price level is likely to rise.</p> Signup and view all the answers

    Which of the following groups is categorized by the Bureau of Labor Statistics as 'not in the labor force'?

    <p>People who do not fit either of the above two categories.</p> Signup and view all the answers

    What is the characteristic of the trough phase of the business cycle?

    <p>Output and employment bottom out at their lowest levels.</p> Signup and view all the answers

    What is the characteristic of the recession phase of the business cycle?

    <p>A period of decline in total output, income, employment, and trade.</p> Signup and view all the answers

    What is the characteristic of the recovery phase of the business cycle?

    <p>Output and employment rise toward full employment.</p> Signup and view all the answers

    Who is counted as being in the labor force?

    <p>Both those who are employed and those who are unemployed but actively seeking work.</p> Signup and view all the answers

    What is the labor force?

    <p>The total number of workers, including the employed and unemployed</p> Signup and view all the answers

    How is the labor force participation rate calculated?

    <p>Labor force / population</p> Signup and view all the answers

    What is the unemployment rate a measure of?

    <p>The percentage of the labor force unemployed</p> Signup and view all the answers

    What type of unemployment results from the labor market not operating perfectly?

    <p>Frictional unemployment</p> Signup and view all the answers

    What is a characteristic of structurally unemployed workers?

    <p>They need retraining or additional education to find a new job</p> Signup and view all the answers

    What is the formula for calculating the unemployment rate?

    <p>Unemployment rate = (unemployed / labor force) x 100</p> Signup and view all the answers

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