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21 Cards in this Set
- Front
- Back
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1.What is a business cycle? Identify the characteristics of each phase.
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Recurring increases and decreases in the level of economic activity over periods of years; consist of peak, recession , trough, and expansion phases. |
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2.How do business cycles affect capital goods, durable goods, and non-durable goods?
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Firms postpone purchas of capital goods; purchase of durable goods postponed; non durable goods unaffected relatively |
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3.How is the unemployment rate determined? Who compiles these statistics? What are some of the criticisms about how unemployment is determined?
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4.Identify the characteristics of frictional, structural, and cyclical unemployment.
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frictional- searching and waiting structural- changes consumer demand/technology cyclical- causeb by decline in total spendingsnd begins in recession phase |
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5. What is the economist’s definition of “full employment”? What is the natural rate of unemployment?
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The economy is said to be producing its potential output. NRU |
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6.What is a GDP gap? How is it measured?
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Actual GDP-Potential GDP= GDP Gap |
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7.What is Okun’s Law?
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The generalization that any 1-percentage point rise in the unemployment rate above the full-employment unemployment rate is associated with a rise in the negative GDp gap by 2 percent of potential output(potential GDP) |
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8.Review the unemployment rates shown in Table 9.2. What groups experience the highest rates?
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African Americans and High School drop outs |
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9.Identify some of the non-economic costs that society suffers when unemployment rates are high.
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loss of skills, self respect, morale, family desintegrations, socio-political, unrest and poverty. racial/ethnic tension, hope, can lead to rapid violent social political change, health issues |
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10.How do the unemployment rates for other industrialized nations compare to one another?
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U.S. relatively low compared to Italy, Germany and france |
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11.What is inflation? How is it measured?
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Rise in general level of prices |
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12.Examine the chart showing inflation rates for the past 40-50 years. What conclusions can you draw from this data?
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Somethin happend in the 80's that made unemployment less volatile |
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13.Compare the characteristics of demand-pull and cost-push inflation
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Demand pull- toomuch spending changing too few goods cost push- rising prices in terms of factors that raise per unit production on cost of each level of spending |
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14.What is the difference between nominal income and real income?
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Nominal- current real= adjusted for inflation |
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15.What is the economic significance between anticipated inflation and unanticipated inflation?
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anticipated- redistrubution effects of inflation less severe if people antipate inflation and orand/or adjust their nominal incomes, |
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16.Who is hurt by inflation? Who benefits from inflation? Why
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Hurt- savings accounts, bonds, insurance polocies Benefit- wage, fixed rate mortgage |
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17.What is the inflation premium?
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the expected rate of inflation |
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18.What is the difference between nominal interest rates and real interest rates?
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Real: % increase in purchase power that borrowers pay lenders -the interest rate expreses in dollars of constant value( adjusted for inflation) and equal to the nominal interest rate less the expected rate of inflation. Nominal: % increase in money that borrower pays lender including anticipation of inflation - the interest rate expressed in terms of annual amounts currently charged for interest and not ajusted for inflation. |
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19.What is deflation?
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a decline in the economy's price level |
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20.What is hyperinflation? Cite some examples.
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a very rapid rise in the price level: an extremely high rate of inflation Germany after WWI ; Japan after WWII |
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21.THE LAST WORD: What correlation is there between the stock market and the economy?
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