Chapter 10 MyEconLab

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The rule of 70
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is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double
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The two key factors that cause labor productivity to increase over time are
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the quantity of capital per hour worked and the level of technology
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These lead to economic growth:
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Increase in the capital stock, technological change, improved labor productivity
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Potential GDP
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Increase over time as technological change occurs and increases over time as the labor force grows
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The best measure of the standard of living of the typical person in a country is
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real GDP per person
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Potential GDP is
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sometimes greater, sometimes less, and sometimes equal to actual real GDP
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The high point of economic activity is called
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a peak
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The low point of economic activity is called
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a trough
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The period between the high point of economic activity and the following low point is called
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an recession
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The period between the low point of economic activity and the following high point is called
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an expansion
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What is the general relationship between the business cycle and unemployment and inflation?
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During an expansion, unemployment falls and inflation increase.
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The agency that identifies a recession is the
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NBER-National Bureau of Economic Research
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During the expansion phase of the business cycle, production, employment and income
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increase
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During the recession phase of the business cycle, production, employment and income
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decrease
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These contribute to shorter recessions, longer expansions, and less severe fluctuations in real GDP
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Fiscal policy, Social Security benefits, and a service-based economy

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