macro ch 12 hw

In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 5 percent, then real GDP must be:

$98 trillion.

If there is 2 percent frictional unemployment, 3 percent structural unemployment, and 1 percent cyclical unemployment, then the natural rate of unemployment equals:

5 percent.

If firms maintain preset prices in the short run, then the primary cause of output gaps is changes in:

economy-wide spending.

Recessions tend to be ______ by ______ the rate of inflation.

followed; a decrease in

Falling growth rates during the 2007-2009 recession occurred:

in the United States, China, Germany, the United Kingdom, and Japan.

Economic activity moves from a period of expansion to a ______ and then moves into a period of ______ until it reaches a _____.

peak, recession; trough

If the actual rate of unemployment equals the natural rate of unemployment, then:

potential output equals real GDP.

A recession occurs when ______, when _______, or when both of these occur.

potential output grows slowly; actual output falls below potential output

In the long run, total spending affects ______, and output is determined by _______.

prices; inputs and productivity

The decline in the natural rate of unemployment between the 1979 and the 2000s might be the result of:

the changing age structure of the population and more efficient labor markets.

Among the most important indicators used by the NBER Business Cycle Dating Committee to determine the beginning of the 2007-2009 recession were all of the following except:

the consumer price index.

An informal definition of a recession is at least ______ consecutive quarters of declining real GDP.

two

The longest and most severe recession in the United States since 1925 began in:

1929

If potential output equals $8 billion and actual output equals $10 billion, then this economy's output gap should be expressed as:

25 percent.

Which of the following workers is least likely to lose his/her job during a recession?

A police officer

Which of the following does not describe a characteristic of short-term economic fluctuations?

Expansions and recessions are felt in only a few sectors of the economy.

Contrary to behavior that would be required to eliminate output gaps, many firms in the economy:

adjust their prices only periodically.

Indicators of economic activity that move at the same time as the overall economy are called ______ indicators.

coincident

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