Economic Fluctuations

Question 1

True or false. Until the 1970s, inflation rates in the United States tended to be low and growth was slow and unemployment was high.

Answer 1

True

Question 2

Economy experience a slow growth, high unemployment, and high inflation all at once.

Answer 2

Stagnation

Question 3

And observed and repeated pattern of the ups and downs in output, employment, and prices.

Answer 3

Business cycle

Question 4

Which phase of the business cycle shows output increasing, prices rising rapidly, and unemployment falling?

Answer 4

Expansionary phase

Question 5

Government actions design to smooth out ups and downs and output, employment, and prices.

Answer 5

Stabilization policy

Question 6

What phase of the business cycle shows a downturn of output that continues for two consecutive quarters?

Answer 6

Recession

Question 7

What phase of the business cycle shows the upturn from trough to peak?

Answer 7

Expansion

Question 8

The recession of 1929 to 1939 was so severe it was given what special name?

Answer 8

The great depression

Question 9

A very severe economic downturn

Answer 9

Depression

Question 10

True or false. President Harry Truman once said that when your neighbor is out of work, that’s a recession; but when you lose your job, that’s a depression.

Answer 10

True

Question 11

A situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains high.

Answer 11

Stagflation

Question 12

The United States is in a recession if

1) The gross domestic product (GDP – real output) declines for two successive quarters
2) nominal output declines for two successive quarters
3) The price level falls in 2 successive quarters
4) unemployment rises in 2 successive quarters

Answer 12

The GDP declines for two successive quarters

A negative growth of the GDP or gross domestic product for two consecutive quarters marks the start of a recession.

Question 13

True or false. I wore in the middle is that affects the US stable economy could cause a contraction.

Answer 13

True

Question 14

True or false. A contraction means that the economic activity has increased.

Answer 14

False

Question 15

A contraction means that the economic activity has slowed down.

Answer 15

True

Question 16

True or false. During the great recession of 2007 to 2009 do United States experienced decreasing unemployment and a high rate of inflation.

Answer 16

False

Question 17

True or false. During the great recession of 2007 to 2009 the United States experienced increasing unemployment and a low rate of inflation.

Answer 17

True

Question 18

Over time, there is a tendency for

1) . Major macroeconomic variables to move together in a predictable way
2) inflation and unemployment to increase simultaneously
3) major macroeconomic variables to behave unpredictably
4) productivity and unemployment to increase simultaneously

Answer 18

Major macroeconomic variables to move together in a predictable way

Question 19

Economists use the phrase “business cycle” when discussing

1) movements in interest rates
2) fluctuations in aggregate measures of economic output or income
3) fluctuations in employment
4) changes in economic productivity

Answer 19

Fluctuations in aggregate measures of economic output or income

Aggregate measures of economic output and incomes are what define the business cycle.

Question 20

During the expansionary phase of the business cycle, it is likely that real income will

1) increase, the price level will decrease, and the unemployment rate will decrease
2) increase, the price level will increase, and the unemployment rate will decrease
3) increase, the price level will increase, and the unemployment rate will increase
4) decrease, the price level will increase, and the unemployment rate will increase

Answer 20

Increase, the price level will increase, and the unemployment rate will decrease.

Question 21

What are the turning point of the business cycle called

Answer 21

Peaks and troughs

Question 22

Put the following for phases of the business cycle in the correct order.

Expansion
Recession
Trough
Peak

Answer 22

The correct order is peak, recession, trough, expansion

Question 23

The longest contractionary period in the US was

1) The Great Recession
2) . The double dip recession of the early 1980s
3) The Great Depression
4) The recession in the 1990s

Answer 23

The great depression

The great depression lasted 10 years from 1929 to 1939.

Question 24

Since World War II the highest unemployment rate during a downturn was

1) 10.0%
2) 10.8%
3) 25%

Answer 24

The correct answer is 10.8%. This occurred in October 1982.