The Business Cycle – Flashcards
Unlock all answers in this set
Unlock answersquestion
business cycle
answer
a model of economic change that shows a pattern of growth and decline
question
depression
answer
a time when the ecnomy is very poor and there is a high rate of unemployment
question
production
answer
the creation of goods and services in an economy
question
recession
answer
a decline in the business cycle, when people produce and spend less
question
recovery
answer
an upturn in the business cycle, when people produce and spend more
question
There are five stages in a recession. 1. job loss 2. falling production 3. falling demand (occurs twice) 4. peak production In which order do these stages occur?
answer
3, 2, 1, 3, 4
question
Which scenario best reflects the relationship between production and demand in a recession?
answer
Car dealerships cannot obtain stock.
question
Which indicators do economists use to determine the state of the economy?
answer
-gross domestic product (GDP) -employment levels
question
Which of the following events most likely explains renewed demand in a recovery period?
answer
Increased employment means increased availability of funds.
question
These are the four stages of the business cycle. 1. depression 2. prosperity 3. recession 4. recovery In which order do these stages occur?
answer
2,3,1,4
question
Which best describes how a recession develops as demand and production decrease?
answer
The recession feeds on itself.
question
Which best describes what is represented in the business cycle model?
answer
macroeconomic trends
question
Which event best describes why it is difficult to sell a home during a recession?
answer
Demand greatly decreases.
question
During a recession, what is one way governments try to encourage growth?
answer
by stopping government spending
question
Which best describes the nature of cause and effect in the context of the business cycle?
answer
Each effect has a cause
question
Which of the following conditions is most indicative of recovery?
answer
The economy is growing again.
question
Income reaches the highest level at the __________ point of the business cycle.
answer
prosperity
question
What do these graphs indicate about the relationship between employment levels and prices during economic cycles?
answer
Rising unemployment rates drive prices higher.
question
Which best describes how governments respond to changes in the business cycle?
answer
Governments reduce spending.
question
Why might buying a home during a recession be a good decision for some consumers?
answer
-Housing prices are down. -Less demand means more options for buyers. -Less demand means less competition with other buyers.
question
Which of the following is a characteristic of the prosperity phase of the business cycle?
answer
high levels of production
