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Business Flashcards

21.3 The business cicle

The high point of a economic activity is called A peak
Which of the following desribes the effect of the business cycle on the inflation rate? The unemployement rate increases and the inflation rate falls during recessions
The low point of economic activity is called a trough
The period between the high point of economic activity and the following low point is called a recession
The period between the low point of economic activity and the following high point is called an expansion
Why might the unemployment rate continue to rise during the early stae of a recovery? Because (a) and (c) are true:a) Employement may grow slowly relative to the growth of the labor forceb) Some firms continue to operte well below capacity even after a recession has ended
Which of the following choices is correct? (about recessions and expansions) Recessions were more severe and lasted longer in the first half of the 20th century than in the second half
Many economists agteee the difference (recessions in the first vs. second half of 20th cnt.) is due to all of the following reasons except: Sine the 1950s, people have become more rational and control their spending countercyclically.
Consider the following goods, which are likely to fluctuate more / less than fluctuation of real GDP More than (Durabl goods)- Ford F150 trucks- Kenmore refrigator – Caterpillar industrial traktorsLess than (non-durable goods)- McDonalds BigMac- Huggies Diapers
The national Bureau of Econ (NBER), a private group, is responsible for declaring when recession begin and end. The BEA, part of the Gov., might not want to take on this responsibility, Which of the following is th most appropriate reason for th BEA’s refusal? Because it is part of the Government, the BEA could be pulled into politics with the dating of recessions.
When firm expand during recession, they cannot be certain when recovery will occur nd know they could expereience prolonged losses
A more cautios approach (to expansion during a recession) might be advisable where: Sales are particular cyclical
Real GP was 15.5 Trillion. This value is a large number. Therefore economic growth must have been high during 2012. Do you agree with this statement? No, I do not agree.
Changes in the demand for housing affect Whirlpool’s sale because Washing mashines and dryers are installed or included in virtually every home purchased.
Imagine you own a business and you layed off 20% of workforce during a recession. Once economic activity picks up and your sales begin to increase, why might you not immidiately start re-hiring? Before rehiring you would like to make sure that this economic expansion lasts.
What is the great moderation? The absence of severe recessions sine the mid 1980’s
By 2011, why might some people have considered the great moderation to habe been a delusion? The recession that began in December 2007 was the longest and most severe since the great recession of the 1930’s
What is the general relationship between the business cycle, unemployment and inflation? During an expansion, unemployment falls and inflation increases
Use the graph to help determine whichone of the following statements regarding fluctuations in GDP is true: In the first half of the 20th centurity, real GDP had much more severe swings than in the second half.
From a trough to a pea, the economy goes through the expansion phase of the business cycle
Typically, when will the NBER announces that the economy is a rcession? A year or more after the recession has begun
As the economy nears the end of an expansion, which of the following typically occurs?
As the economy nears the end of an expansion, which of the following typically occurs? A) All of the above- Interests rise- Wages rising faster than prices- Profits are falling
Purchases of which types of goods are business cylcles most likely to affect? Durable goods
Recessions cause the inflation rate to…and th unemployement rate to… Decrease / Increase
Which of the following is not a reason that the economiy is considerd to have been more stable in the 1950 to 2007 period than in other periods? Continoually falling oil prices
During the last half of the 20th century the US economy experienced long expansions, interrupted by relatively short recessions

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