Macro Chapter 10
The longest expansion of the United States economy since 1925 began in:
1991
If there is 2 percent frictional unemployment, 3 percent structural unemployment, and 1 percent cyclical unemployment, then the natural rate of unemployment equals:
5%
The increase in the unemployment rate during a recession is associated with which type of unemployment?
Cyclical unemployment
Depression is:
a particularly severe and protracted recession.
A boom is:
a particularly strong and protracted expansion
Cyclical unemployment is equal to zero when:
actual GDP and potential GDP are equal.
Okun's law expresses the relationship between:
cyclical unemployment and the output gap.
According to Okun's law, each extra percentage point of ______ unemployment is associated with a ______ widening of a negative output gap, measured in relation to potential output.
cyclical; 2 percent
If firms maintain preset prices in the short run, then the primary cause of output gaps is changes in:
economy-wide spending.
If potential output equals $8 billion and actual output equals $9 billion, then this economy has a(n):
expansionary gap.
When actual output is greater than potential output there is a(n):
expansionary gap.
Recessions tend to be ______ by ______ the rate of inflation.
followed; a decrease in
In the long run, total spending only influences:
inflation.
In a recession, cyclical unemployment:
is rising
Varying the quantity of output produced and sold at preset prices is called:
meeting demand
Workers in durable-goods industries are ______ workers in service industries to lose their jobs during a recession.
more likely than
If all prices adjusted immediately to balance the quantities supplied and demanded for all goods and services:
output gaps would not exist.
The beginning of a recession is called the:
peak
An expansion occurs when ______, when _______, or when both of these occur.
potential output grows rapidly; actual output rises above potential output.
In the long run, total spending affects ______, and output is determined by _______.
prices; inputs and productivity
A period in which the economy is growing at a rate significantly below normal is called a(n):
recession
When actual output is less than potential output there is a(n):
recessionary gap.
Typically, the unemployment rate ______ during a recession and ______ during an expansion.
rises; falls
Changes in the growth rate of potential output and deviations of actual output from potential output are two logical explanations for:
short-term economic fluctuations.
If actual GDP equals potential GDP, then:
the actual unemployment rate equals the natural rate of unemployment.
If real GDP is less than potential GDP, then:
the actual unemployment rate is greater than the natural rate of unemployment.
If real GDP is greater than potential GDP, then:
the actual unemployment rate is lower than the natural rate of unemployment.
An expansion is a period in which:
the economy is growing at a rate significantly above normal.
Potential output is:
the maximum sustainable amount of output.
In the short run, ______ determines output, and in the long run ______ determines output.
total spending; potential output
The end of a recession is called the:
trough
For policymakers, the problem with a recessionary gap is ________ and the problem with an expansionary gap is ________.
wasted resources; a tendency for inflation to increase
Recessions in the United States typically are:
widely felt outside the United States.
According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ______ by ______ percent of potential output.
widens; two