Economics Chapter 6

What has been the range of the decline in real output for U.S. recessions since 1950?

-0.5 percent to -4.9 percent

The recurrent ups and downs in the level of economic activity extending over several years are a description of:

A business cycles

A recession is defined as:

A fall in real GDP that lasts six months or longer

If the GDP gap is positive then:

Actual GDP is greater than potential GDP

If the GDP gap is negative then:

Actual GDP is less than potential GDP

The above diagram is best described as an idealized:

Business cycle

In calculating the unemployment rate part time workers are:

Counted as employment because they are receiving payment for work

Some economists prefer to use the term business fluctuations rather than business cycles to describe the historical growth record in the United States because:

Cycles imply regularity while fluctuations do not

Unemployment that occurs when there is deficient demand of the goods and services of an economy is called:

Cyclical unemployment

Inflation caused by an increase in aggregate spending is referred to as:

Demand-pull inflation

Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is:

Demand-pull inflation

In the expansion phase of a business cycle:

Employment and output increase

A trough in the business cycle occurs when:

Employment and output reach their lowest levels

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are:

Excluded

At the full-employment unemployment rate there is only:

Frictional and structural unemployment

Search and wait unemployment is another way to describe:

Frictional unemployment

A recession is a decline in:

GDP that lasts six months or longer

If unemployment is above the natural rate of unemployment then potential GDP is:

Greater then actual GDP

Refer to the above diagram. The straight line E drawn through the wavy lines would provide an estimate of the;

Growth trend

The natural rate of unemployment:

Is equal to the total of frictional and structural unemployment

The best example of a "frictionally unemployment" worker is one who:

Is in the process of voluntarily switching jobs

The level of total spending is the immediate determinant of the:

Level of real output and employment

The rate of unemployment when the economy is at its potential output is called the:

Natural rate of unemployment

Refer to the above diagram. The phases of the business cycle from points A to D are respectively:

Peak, recession, trough, expansion

The GDP gap measures the amount by which:

Potential GDP exceeds actual GDP

Which phase of the business cycle would be most closely associated with an economic contraction?

Recession

Which industry or sector of the economy would least likely be affected by the business cycle?

Services

When a group of workers finds that their job skills and work experience have become obsolete and are not needed by industry this type of unemployment is:

Structural

A worker who loses a job at a call center because business firms switch the call center to another country is an example of:

Structural unemployment

Inflation is a:

Sustained rise in the general level of prices

Which measures the changes in prices o a "market basket" of some 300 goods and services purchased by typically urban consumers?

The Consumer Price Index

Inflation is a rise in:

The general level of prices over time

Which statement is correct?

The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle