Principles of Economics: Business Cycle and Unemployment

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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?

A significant increase in unemployment Signup and view all the answers

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

The business cycle Signup and view all the answers

What is the outcome of rapid economic growth?

Rapid inflation Signup and view all the answers

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

The economy is at full employment and the price level is likely to rise. 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'?

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

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

Output and employment bottom out at their lowest levels. Signup and view all the answers

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

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

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

Output and employment rise toward full employment. Signup and view all the answers

Who is counted as being in the labor force?

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

What is the labor force?

The total number of workers, including the employed and unemployed Signup and view all the answers

How is the labor force participation rate calculated?

Labor force / population Signup and view all the answers

What is the unemployment rate a measure of?

The percentage of the labor force unemployed Signup and view all the answers

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

Frictional unemployment Signup and view all the answers

What is a characteristic of structurally unemployed workers?

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

What is the formula for calculating the unemployment rate?

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

Principles of Economics: Business Cycle and Unemployment

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