Unit 12 Q Bank

Which of the following points to a general decline in prices occurring during severe recessions and the unemployment rate is rising. A) Deflation B) Stagnation C) Stagflation D) Contraction

A) Deflation

Which segment of the business cycle would one expect to find rising interest rates and higher wages? A) Expansion B) Recession C) Contraction D) Trough

A) Expansion

Which of the following are characteristics of an economic downturn? A) Higher consumer debt B) Increasing industrial production C) Decreasing inventories D) Decreasing defaults

A) Higher consumer debt

Which of the following are characteristics of the expansion phase of the business cycle? A) Increase industrial production B) Increasing defaults C) Higher consumer debt D) Rising inventories

A) Increase industrial production

U.S. consumers are increasing their imports of foreign-made goods. On this data alone, one might expect gross domestic product (GDP) to A) decrease. B) increase. C) initially increase sharply and then decrease. D) remain the same.

A) decrease.

U.S. consumers are increasing their imports of foreign-made goods. On this data alone, one might expect gross domestic product (GDP) to A) decrease. B) remain the same. C) initially increase sharply and then decrease. D) increase.

A) decrease.

Downturns in the business cycle or economic contractions are characterized by all of the following except A) falling inventories. B) higher consumer debt. C) rising numbers of bankruptcies. D) rising numbers of bond defaults.

A) falling inventories.

Economists call mild, short-term contractions A) recessions. B) depressions. C) declines. D) troughs.

A) recessions.

According to the U.S. Commerce Department, the economy is in a depression when a decline in real output of goods and services lasts A) 6 months or more (2 quarters). B) 18 months or more (6 quarters). C) 9 months or more (3 quarters). D) beyond 12 months (4 quarters).

B) 18 months or more (6 quarters).

Which of the following groupings might indicate the economy is contracting? A) Consumer borrowing is low, property values are high, and stock prices are falling. B) Bond defaults are rising, inventories are rising, and GDP is falling. C) Inventories are at record lows, stock prices are at record highs, and bankruptcies are falling. D) Bond prices are falling, stock prices are rising, and GDP is rising.

B) Bond defaults are rising, inventories are rising, and GDP is falling.

Which of the following groupings might indicate the economy is contracting? A) Inventories are at record lows, stock prices are at record highs, and bankruptcies are falling. B) Bond defaults are rising, inventories are rising, and GDP is falling. C) Bond prices are falling, stock prices are rising, and GDP is rising. D) Consumer borrowing is low, property values are high, and stock prices are falling.

B) Bond defaults are rising, inventories are rising, and GDP is falling.

Which of the following points to a general decline in prices occurring during severe recessions and the unemployment rate is rising. A) Contraction B) Deflation C) Stagnation D) Stagflation

B) Deflation Deflation is a general decline in prices. Deflation usually occurs during severe recessions when unemployment is on the rise.

Different degrees of inflation can impact the economy differently. Which of the following best reflects this? A) Mild inflation can thwart business investments and slow economic growth. B) Mild inflation can encourage growth and stimulate the economy. C) High inflation pushes prices to their highest levels, continuously pushing the economy higher. D) High inflation spurs the economy forward by increasing the demand for goods.

B) Mild inflation can encourage growth and stimulate the economy.

Recent reports indicate that the gross domestic product (GDP) has been declining steadily over the past two quarters. This would suggest A) a depression. B) a recession. C) an inflationary period. D) an economic expansion.

B) a recession.

During periods of economic decline and contraction, one would expect A) production to rise. B) gross domestic product (GDP) to decrease. C) inventories to decrease. D) consumer demand to increase.

B) gross domestic product (GDP) to decrease.

Rising employment due to an increase in demand for goods and services would be associated with periods of A) stagflation. B) inflation. C) stagnation. D) deflation.

B) inflation.

Rising employment due to an increase in demand for goods and services would be associated with periods of A) stagnation. B) inflation. C) deflation. D) stagflation.

B) inflation.

Economists call mild, short-term contractions A) troughs. B) recessions. C) depressions. D) declines.

B) recessions. Economists call mild, short-term contractions recessions. Longer, more severe contractions are depressions.

The business cycle includes all of the following classifications except A) trough. B) waves. C) peak. D) expansion.

B) waves.

According to the U.S. Commerce Department, the economy is in a recession when a decline in real output of goods and services lasts A) 9 months or more. B) beyond 12 months. C) 6 months or more. D) 18 months or more.

C) 6 months or more.

Just as markets can be influenced by many factors, so can the market price of a single company's stock. While all of the following could impact a company's stock price to some extent, which would be the least likely to have a direct and immediate impact? A) Changes in the business cycle B) Federal Reserve Board (FRB) policies C) Political elections D) The company's earnings

C) Political elections The price of a company's stock will be impacted directly by the company's earnings and changes in the business cycle. Less directly impactful would be FRB policies to loosen or tighten credit, and least likely to have a direct impact would be the outcome of political elections. It should be noted, however, that the outcome of political elections can influence FRB policies over time and, therefore, where the economy stands in relation to the business cycle. Still, however, elections would have less of an immediate impact.

Recent reports indicate that the gross domestic product (GDP) has been declining steadily over the past two quarters. This would suggest A) an economic expansion. B) a depression. C) a recession. D) an inflationary period.

C) a recession.

Economists refer to longer, more severe contractions in the economy as A) recessions. B) declines. C) depressions. D) depletions.

C) depressions.

An expansion in the business cycle would be characterized by A) increasing college enrollments and enlistment in military service. B) increase in want ads in newspapers and decrease in nonfarm jobs. C) increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values. D) higher consumer debt and rising inventories.

C) increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values.

According to the U.S. Commerce Department, the economy is in a recession when a decline in real output of goods and services lasts A) 18 months or more. B) beyond 12 months. C) 9 months or more. D) 6 months or more.

D) 6 months or more.

Which segment of the business cycle would one expect to find rising interest rates and higher wages? A) Recession B) Trough C) Contraction D) Expansion

D) Expansion

Downturns in the business cycle or economic contractions are characterized by all of the following except A) higher consumer debt. B) rising numbers of bankruptcies. C) rising numbers of bond defaults. D) falling inventories.

D) falling inventories.

An expansion in the business cycle would be characterized by A) higher consumer debt and rising inventories. B) increasing college enrollments and enlistment in military service. C) increase in want ads in newspapers and decrease in nonfarm jobs. D) increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values.

D) increasing consumer demand for goods and services, increasing industrial production, and rising stock markets and property values.

The business cycle includes all of the following classifications except A) expansion. B) peak. C) trough. D) waves.

D) waves.