Business Cycles, Unemployment, and Inflation

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the recurrent ups and downs in the level of economic activity extending over several years are a description of:

the business cycle

phases of the business cycle

Peak, Recession, Trough and Expansion

Which phase of the business cycles would be most closely associated with an economic contraction?

Recession

In which industry or sector of the economy is least likely to be affected by the business cycle?

agricultural commodities

A recession is defined as:

A period of decline in total output, income, and employment. A fall in real GDP that lasts six months or longer

In calculation the unemployment rate, how are "discouraged" workers who are not actively seeking employment are treated?

Excluded

The best example of a "frictionally unemployed" worker is one who:

Is discouraged and not actively seeking work

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called:

Natural unemployment

When a group of workers finds that their job skills and work experience have become obsolete and are not needed by industry, this type of unemployment is:

Structural unemployment

Search and wait unemployment is another way to describe:

Frictional unemployment

the rate of unemployment when the economy is at its potential output is called the:

The natural rate of unemployment.

The GDP gap measures the:

amount by which potential GDP exceeds actual GDP.

Okun's law:

shows the relationship between the unemployment rate and the size of the GDP gap.

Okun's law indicates that for:

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point GDP gap occurs.

The rate of unemployment tends to be lowest for:

college graduates

Inflation is a rise in

the general level of prices of goods and services in an economy over a period of time

The consumer price index

An index that measures the prices of a fixed "market basket" of some 300 goods and services bought by a "typical" consumer?

inflation caused by an increase in aggregate spending is referred to as

Demand-pull inflation

A worker would be hurt least by inflation when the

worker is protected by a cost-of-living adjustment clause in an employment contract.

in the 1920s, Germany experienced an economic condition which can be best described as:

Hyperinflation

The Consumer Price Index was 115 one year and 120 the next year. The rate of inflation from one year to the next was approximately:

4.3 percent

Inflation means that:

prices in the aggregate are rising, although some particular prices may be falling.

Calculate the unemployment rate

Unemployment rate = unemployed / labor force x 100

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