L6 Tutorial Ch 6Business Cycles and Unemployment

MULTIPLE CHOICE QUESTIONS

1. Economists use the phrase "business cycle" when referring to fluctuations in:

A. real GDP.B. the chain price index.C. the consumer price index.D. the general level of prices.

2. The period of declining growth in real GDP between the peak of the business cycle and the trough is called a(n):

A. recessionary phase.B. recovery.

C. expansionary phase.D. stationary phase.

3. The period of growth in real GDP between the trough of the business cycle and the next peak is called the:

A. recessionary phase.B. recovery phase.

C. contractionary phase.D. cyclical phase.

4. Which of the following will most likely occur during the recessionary phase of a business cycle?

A. Real GDP rises, and the unemployment rate falls.B. Real GDP declines, and the rate of inflation rises.C. The sales of most businesses decline, and the unemployment rate rises.D. Inflation rises, and employment/population ratio falls.

5. Which of the following will most likely occur during the recovery phase of a business cycle?

A. Real GDP rises, and unemployment falls.B. Real GDP declines, and inflation rises.C. Interest rates rise, and the number of business failures rise.D. Inflation rises, and employment falls.

6. Economists usually use the term "recession" to refer to:A. any slowdown in the growth of real GDP.B. zero real GDP growth.C. two or more consecutive quarters of declining real GDP.D. a reduction in nominal GDP lasting more than six months.

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7. Which of the following is true of the business cycle record of the United States?

A. Recessions have been lengthier during the last two decades than was true prior to 1980.B. Real GDP contracted throughout most of the 1950s.C. Real GDP in 2000 was approximately the same as 1950.D. Since 1950, the fluctuations in GDP have been less severe than before 1950.

8. 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: peak, depression, and recovery.C. recurring growth and decline in real GDP.D. period of time in which a business is established and ceases operations.

9. The point at which real output reaches a maximum during a business cycle is called the:

A. peak.B. recession.

C. recovery.D. trough.

10. The period during which real output falls during a business cycle is called:

A. Peak.B. Recession.C. Recovery.D. Trough.

11. The phase of the business cycle that follows a recession is known as the:

A. Peak.B. Recession.C. Recovery.D. Trough.

12. As a general rule, a recession is a decline in real GDP lasting at least:

A. one year.B. six months.C. three months.D. one month.

13. As a general rule, a recession occurs when there is a six consecutive month fall in:

A. nominal GDP.B. real GDP.

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C. the price level.D. the trade balance.

14. Since World War II, the average length of recessions in the United States has been:

A. 2 months.B. 11 months.C. 2 years.D. 3 1/2 years.

15. A business cycle is the period of time in which:

A. a business is established and ceases operations.B. there are four phases: peak, recession, trough and recovery.C. the price level varies with real GDP.D. expansion and contraction of economic activity are equal.E. none of these are true.

16. What stage of the business cycle immediately follows the trough?

A. Peak.B. Recovery.C. Recession.D. Depression.

17. The ____ phase of the business cycle follows a recession.

A. RecoveryB. RecessionC. PeakD. Trough

18. A phase in the business cycle in which the economy's real GDP declines is known as:

A. a depression.B. a recession.C. a downtick.D. disequilibrium.E. limited demand.

19. A long and deep recession in the business cycle is:

A. unemployment.B. a trough.C. a recession.D. a depressionE. unavoidable.

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20. The business cycle consists of four phases. At the top we have:

A. recovery, followed by peak, and then recession followed by a recession.B. recovery, followed by a recession, and then peak followed by recession.C. peak, then an upturn followed by a recession, and then recession.D. peak, then a recession followed by recovery, and then recession.E. peak, then a recession followed by recession, and finally, recovery.

Exhibit 6-1 Business cycle

21. In Exhibit 6-1, the recovery phase of the business cycle can be represented by points:

A. CHOICE BLANKB. C.C. E.D. C to E.E. E to G.

22. In Exhibit 6-1, point E represents:A. recession and a trough.B. peak and a trough.C. recession and a peak.D. recovery and a peak.

23. In Exhibit 6-1, the recession phase of the business cycle can be represented by point(s):

A. CDE.B. BCD.C. EFG.

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D. A and E.

24. The phase in the business cycle in which real GDP declines is called a:

A. trendline.B. peak.C. recession.D. recovery.E. trough.

25. If you look for a job for eighteen months after graduation, but fail to generate an offer, even after lowering your expectations, the economy is probably in the business cycle phase called a:

A. recession.B. peak.C. boom.D. recovery.E. trough.

26. Which of the following statements is true?

A. The business cycle is caused by changes in total spending. B. A recession is caused by a decrease in total spending. C. A recovery is caused by an increase in total spending. D. All of the above.

27. Which of the following statements is true? A. The four phases of the business cycle, in order, are: peak, expansion, trough, recession. B. When unemployment is rising then real GDP is rising. C. The economic problem typically associated with an expansion is rising unemployment. D. Full employment exists in an economy when the unemployment rate equals the sum of seasonal, frictional, and structural unemployment rates.

28. If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in a few weeks, Mr. Jackson is considered:

A. frictionally unemployed.B. cyclically unemployed.C. seasonally unemployed.D. structurally unemployed.E. unwise to quit his job without already having another one.

29. Which of the following is true?

A. The GDP gap is the difference between full-employment real GDP and actual real GDP.

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B. We desire economic growth because it increases the nation's standard of living. C. Economic growth is measured by the annual percentage increase in a nation's real GDP. D. Discouraged workers are a reason critics say the unemployment rate is understated. E. All of the above are true.

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