Ch. 16, Quiz Review Essay

question

A business cycle is the a. period of time in which expansion and contraction of economic activity are equal. b. period of time in which there are three phases which are peak, depression, and expansion. c. recurring growth and decline in real GDP. d. period of time in which a business is established and ceases operations.
answer

Recurring growth and decline in real GDP.
question

A business cycle is the period of time in which a. a business is established and ceases operations. b. there are four phases which are peak, recession, trough and expansion. c. the price level changes. d. expansion and contraction of economic activity are equal.
answer

There are four phases which are peak, recession, trough and expansion.
question

The _________ phase of the business cycle follows a recession. a. expansion b. recession c. peak d. trough
answer

Trough
question

In Exhibit 11, the expansion phase of the business cycle is represented by points a. A and C. b. B and F. c. B and D. d. C and G.
answer

B and F
question

A general rule is that economy is experiencing a recession when a. real GDP declines for at least three months. b. real GDP declines for at least nine months. c. nominal GDP declines for at least nine months. d. real GDP declines for at least six months.
answer

Real GDP declines for at least six months.
question

The increase in unemployment associated with a recession is called a. structural unemployment. b. frictional unemployment. c. discouraged unemployment. d. cyclical unemployment.
answer

Cyclical Unemployment
question

What stage of the business cycle immediately follows the trough? a.peak b. recovery c. recession d. depression
answer

Recovery
question

The government’s chief forecasting gauge for business cycles is the a. unemployment rate. b. real GDP. c. personal income index. d. index of leading indicators.
answer

Index of Leading Indicators
question

Which of the following is not a lagging indicator? a. duration of unemployment b. stock prices c. commercial and industrial loans d. prime rate
answer

Stock Prices
question

Suppose the official unemployment rate is 10 percent. We can conclude without question that a. the same 10 percent of the people in the economy were out of work for the entire year. b. 1 out of every 10 people in the civilian labor force is currently unemployed. c. the same 10 percent of the people in the civilian labor force was out of work for the entire year. d. each person in the civilian labor force was out of work for 10 percent of the year.
answer

1 out of every 10 people in the civilian labor force is currently unemployed.

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