Macroeconomics- Ch. 9 Business Cycles, Unemployment, and Inflation

Potential output

*At the economy's natural rate of unemployment the economy achieves its...? (Hint: Its also called full-employment output.)

Hyperinflation

*During a period of [...]? people tend to hold goods rather than money.

Expansion

*In the [...]? phase of the business cycle will the economy most likely experiences rising real output and falling unemployment rates.

An unexpected change in the level of total spending.

*Most economists agree that the IMMEDIATE cause of most business cycle variation is...?

Discouraged workers are not counted as unemployed.

*Official unemployment statistics understate unemployment because...?

Understate the level of unemployment.

*Part-time workers are counted as fully employed and therefore the official unemployment rate may...?

A business cycle.

*Recurring upswings and downswings in an economy's real GDP over time are called...?

The actual GDP and potential GDP.

*The GDP gap measures the difference between...?

Unemployed

*The United States' economy is considered to be at full employment when about 4-5 percent of the labor force is...?

Bureau of Labor Statistics

*The government agency responsible for collecting and reporting unemployment data is the...?

A recession.

*The phase of the business cycle in which real GDP declines is called...?

A trough.

*The phase of the business cycle in which real GDP is at a minimum is called...?

Labor force that is unemployed.

*The unemployment rate is the percentage of the...?

Real income

*What is found by dividing nominal income by the price index (in hundredths)?

Structural unemployment

*What may involve a locational mismatch between unemployed workers and job openings?

Inflation

*What means that prices on average are rising, although some particular prices may be falling? (Hint: It is also undesirable because it arbitrarily redistributes real income & wealth AND affects both the level and the distribution of income.)

Okun's law

*What shows the relationship between the unemployment rate and the size of the negative GDP gap?

Excessive

Demand-pull inflation when total spending in the economy is...?

"Rule of 70"

Given the annual rate of inflation, the [...]? allows one to calculate the number of years required for the price level to double.

Subtracting last year's price index from this year's price index and dividing the difference by last year's price index.

The annual rate of inflation can be found by...?

Affect output most are capital goods and durable consumer goods.

The industries or sectors of the economy in which business cycle fluctuations tend to...?

Cost-push inflation.

Inflation initiated by increases in wages or other resource prices is labeled...?

They occur irregularly and unexpectedly.

Innovations such as the microchip and the Internet lead to business cycle variations because...?

Fictionally unemployed

Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kara presently is...?

Level of total spending.

Most economists agree that the immediate determinant of the volume of output and employment is the...?