Module 4 - Macro Measures of the Economy and the Business Cycle

An especially deep and lengthy period of economic decline is referred to as a

depression

Mr. Clifford makes a list of things that DON'T count in figuring GDP. Which of these things DON'T count?

used goods

The "long run" aggregate supply is usually shown on the graph with a _____________ line.

vertical

Which of the following are categories are included in GDP?

Gov't Spending, Net Exports, Investment, Consumption

Which of the following is NOT a member of the labor force?

A 35 year old living in his parent's basement who hasn't looked for work in two years

The economic organization that tracks unemployment rates is call BLS or:

Bureau of Labor Statistics

In order to compute the real income of a household, the index that should be used is the _______.

CPI

One example of this policy would be to decrease government spending.

Contractionary Fiscal Policy

This policy is used to fight inflation.

Contractionary Fiscal Policy

Which of the following is NOT a component of aggregate demand?

Disposable Income

According the the video watched in class: Name at least three 3 jobs that will likely disappear in the next 20 years due to advanced tech.

Drivers, Cashiers, Bank Tellers, Telemarketers, Fast Food Workers, Travel Agents, Manufacturing Workers.

Real GDP is used to measure the macroeconomic goal of ______..

Economic Growth

One example of this policy is to cut or reduce taxes.

Expansionary Fiscal Policy

Used best during a recession.

Expansionary Fiscal Policy

Khan Academy Notes: The ups and downs of the business cycle very easy to predict.

False

Real GDP is GDP measured in current dollars.

False

According to the video watched in class: Name the six (6) job markets of the future.

IT in Medicine, Trash Engineers, Healthy Foods, Agriculture, Education, Creative Professions, Software Engineer/Designer.

"A significant increase in the amount of physical capital." This scenario ______________ the SRAS (short run aggregate supply).

Increases

What drives the increase in Nominal GDP over time?

Inflation

Aggregate demand:

Is the total quantity of output demanded at alternative price levels, equals aggregate supply at macro equilibrium, is the equal to the total of consumption, investment, government, and net export expenditures.

"Shifter of Short Run Aggregate Supply - a change in taxes, regulations, subsidies can change the incentive of producers and affect the amount they produce. " This is an example of which shifter?

Productivity

Khan Academy Notes: What are the vertical and horizontal access' measuring?

Real GDP & Time

Real GDP can also be better determined by using: Real GDP Per Capita. What is the equation used to figure Real GDP Per Capita?

Real GDP / Country Population

Fidelity website - Business Cycle Update for First Quarter 2021 What is the current business cycle status (Q1) of the the U.S. economy?

Recovery

_______ is a condition of declining Real GDP and uncomfortable inflation.

Stagflation

This is a turning point in the business cycle; the phase in which Real GDP stops its slide and levels off is called the

Trough

Gross Domestic Product is the market value of all final goods and services produced within a country in a given time period.

True

It is highly likely that you will be economically affected by inflation many times in your life.

True

Nominal GDP is GDP measured in current dollars.

True

The proportion of the population that is over the age of 16, and is either employed or actively seeking work is referred to as the labor force.

True

GDP = C + I + G + N "N" can also be calculated as:

X-M

Inflation is

an increase in the average price level of goods and services.

CPI stands for:

consumer price index

The component of GDP that includes the spending of individuals and households in the economy.

consumption

The phase of the business cycle in which Real GDP declines, unemployment rises, and there tends to be little pressure on prices to rise is called an economic _________.

contraction

The kind of unemployment that is connected to a downturn in the economy is ______ unemployment.

cyclical

UR - NR =

cyclical unemployment

When battling unemployment and falling real GDP, a reasonable fiscal policy would be to ______ taxes and increase government spending.

decrease

Assume there is no change in aggregate supply and no change in government policy, an increase in consumer confidence will ______ unemployment and price level will _______.

decrease; increase

If your nominal income rises by 4% and inflation increases by 6% in the same time period, then your real income has _______.

decreased

"A widespread fear of a recession." This scenario ____________ the aggregate demand in the U.S.

decreases

A decrease in the average price level is referred to as

deflation

An especially long and protracted period of economic decline marked by painfully high levels of unemployment and significant declines in real GDP is referred to as ______.

depression

Khan Academy Notes: Using the emotional cycle graphic, at what point is the closest proximity to the optimal time to make investments?

depression

Aggregate demand is shown on a graph with a(n) ____________ slope.

downward

Khan Academy Notes: Using the 'human emotions" graphic, what is the height (top) of emotions?

euphoria

The phase of the business cycle in which Real GDP begins to grow, unemployment falls, and inflationary pressures tend to increase is referred to as the economic ______.

expansion

When output is declining and unemployment is high, _______ fiscal policy should be pursued.

expansionary

The use of government taxing and spending to alter macroeconomic outcomes is ______.

fiscal policy

The kind of unemployment that tends to be shorter in duration and due to a person's entry or re-entry into the job market or voluntarily leaving one job to search for another is _______ unemployment.

frictional

Assume there is no change in aggregate demand and no change in government policy, a supply shock affecting energy costs in the short run will likely increase unemployment and ______ the price level.

increase

When fighting high inflation, a reasonable fiscal approach would be to _______ taxes and/or decrease government spending.

increase

Assume there are no changes in aggregate supply and no change in government policy, a decrease in government spending will likely _____ unemployment and ______ price level.

increase; decrease

"There is a decrease in income tax rates." This scenario _____________ the aggregate demand in the U.S.

increases

Capital goods such as machinery, technology or new buildings that are used to make consumer goods and services is called:

investment

Structural + Frictional unemployment =

natural unemployment

Why do economic bubbles burst?

not enough buyers in the market

The amount of physical goods and services that can be bought by a given amount of money.

purchasing power

Which of the following is an "effect" on aggregate demand?

real wealth, exchange rate, interest rate

A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).

recession

Expansionary Fiscal Policy is intended to move the AD curve to the ____.

right

When there is slow or negative growth in real GDP and the price level in the economy is rising, then we are in a period of ______.

stagflation

When the economy is producing at or near capacity, the aggregate supply curve will become _______.

steeper

The kind of unemployment that exists when there is a mismatch between a worker's skills and the jobs or the location of jobs available is _______ unemployment.

structural

People in the labor force that are actively looking for a job.

unemployment rate

Of the following, what would be the best reason as to why you (yourself right now) are not considered part of the labor force when in comes to defining unemployment rates?

you are a full time student