Econ 1040 Shambora

The business cycle consists of several stages or phases. Which is the accurate sequence?

Recession, trough, expansion, peak

Workers at a car-manufacturing plant are let go because automated machinery has been installed that requires fewer employees to operate. What type of unemployment describes the workers' situation?

Structural unemployment

Unemployment caused by people entering the job market and people quitting a job just long enough to look for and find another one is called:

frictional unemployment.

Keynesians:

generally favor activist government policies.

Keynesian economists believe:

government can implement policy proposals that can positively impact the economy.

The Classical economists argued that:

if unemployment occurs, it will cure itself because wages and prices will fall.

In contrast to a recession in industrialized nations, a recession in pre-industrial nations:

is less visible in its effects on the unemployment rate but it has a larger effect on wage rates.

Classical economists are generally associated with:

laissez faire.

The target rate of unemployment is defined as the:

lowest sustainable rate of unemployment achievable under existing conditions.

If output is below potential output, it is most likely that the economy is:

near a trough.

In order of their occurrence, the phases of the business cycle are:

peak, downturn, trough, upturn.

Frictional unemployment is a result of:

people quitting a job just long enough to look for and find another one.

Classical economists believe that in the short-run, in the real world:

prices and wages weren't flexible enough to bring about equilibrium.

Changes in the institutional structure of the U.S. economy following the Great Depression:

reduced the length of business cycles.

Potential output in the long run:

rises at a trend rate of 2.5 to 3.5 percent per year.

Policies that affect work, capital accumulation, and technological change are primarily relevant to:

the long-run growth framework.

Another term for what the text calls the "target rate of unemployment" is:

the natural rate of unemployment.

Keynesian economists focus their analysis on:

the short run.

The two frameworks conventional economists generally use to analyze macroeconomic issues are:

the short-run and the long-run frameworks.

Business cycles are generally considered in:

the short-run framework.

The business cycle is:

the term used to describe fluctuations in output around its long-term trend.

The longest business-cycle expansion in U.S. history occurred during the ten years from:

1991 until 2001.

The secular trend growth rate in the United States is approximately:

2.5 to 3.5 percent per year.

What turns a business cycle into a structural stagnation?

A slow expansion that keeps the economy below trend.

Which of the following institutional changes would tend to reduce the target rate of unemployment?

An increased number of people reaching the age at which they are more employable

Which of the following statements best depicts laypeople's explanation of the Great Depression at that time?

An oversupply of goods had glutted the market.

Which of the following countries, or groups of countries, has grown at the fastest rate in the last twenty years?

China.

In September 2010, the NBER's Business Cycle Dating Committee decided that the recession that began in December of 2007 had ended in July of 2009. The NBER does not use a popular definition of recession—two quarters of falling GDP—but looks at a variety of monthly statistics to date business cycles. Read the paragraph shown. When the NBER says that a recession is over, what are they saying?

Economic activity is no longer declining

Which of the following statements best characterizes the Keynesian view of business cycles?

Expansions and contractions of the business cycle are symptoms of underlying problems and should be dealt with through activist government policies.

Which of the following was not a solution to the Great Depression favored by Classical economists?

Hire unemployed workers for public works programs

"Classical economist" is often used interchangeably with which term?

Laissez-faire economist

In September 2010, the NBER's Business Cycle Dating Committee decided that the recession that began in December of 2007 had ended in July of 2009. The NBER does not use a popular definition of recession—two quarters of falling GDP—but looks at a variety of monthly statistics to date business cycles. Read the paragraph shown. In July 2009 a recession ended. In business cycle terminology, what does July 2009 mark?

The trough of the cycle

Prior to the Industrial Revolution, unemployment was not generally considered a social problem because:

a reduction in spending would cause wages and income to fall rather than unemployment to rise.

A recession is often considered to be:

an economic downturn that persists for more than two consecutive quarters of the year.

Fluctuations around the long-term growth rate are called:

business cycles.

Most economists agree that during a depression:

economic policy should be used to improve economic conditions.

Frictional unemployment:

comes from people constantly entering the labor force and changing jobs.

In the early 2000s, the United States went through what many economists described as a jobless recovery, which is a situation in which real output grows but the unemployment rate does not fall. Normally, an increase in real output affects:

cyclical unemployment more than structural unemployment.