Econ Chap 9 – Flashcards
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Recurring upswings and downswings in an economy's real GDP over time are called:
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business cycles.
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In the United States, business cycles have occurred against a backdrop of a long-run trend of:
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rising real GDP.
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Most economists agree that the immediate determinant of the volume of output and employment is the:
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level of total spending.
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As it relates to economic growth, the term long-run trend refers to:
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the long-term expansion or contraction of business activity that occurs over 50 or 100 years.
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In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?
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capital goods
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The industries of sectors of the economy in which business cycle fluctuations tend to affect output most are:
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capital goods are durable consumer goods.
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During a sever recession, we would expect output to fall the most in:
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the construction industry.
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The phase of the business cycle in which real GDP declines is called:
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a recession.
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The phase of the business cycle in which real GDP is at a minimum is called:
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the trough.
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The production of durable goods varies more than the production of nondurable goods because:
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durables purchases are postponable.
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A recession is defined as a period in which:
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real domestic output falls.
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In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
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expansion
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Which of the following statements is true about causes of business cycle fluctuations?
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There are a wide range of theories as to the underlying causes of business cycle movements.
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Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?
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All of these are identified as causes of business cycle changes.
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Most economists agree that the immediate cause of most business cycle variation is:
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an unexpected change in the level of total spending.
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An unexpected increase in total spending will cause an increase in GDP:
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if prices are sticky.
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What is the primary reason that changes in total spending lead to cyclical changes in output and employment?
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significant innovations occur irregularly and unexpectedly.
