Business Cycles, Unemployment, and Inflation

What are the four phases of a generalized business cycle as described in the text?

According to the definition used in the text, a recession is a period of decline in total output, income, and employment that lasts how long?

What is identified as the immediate cause of the large majority of cyclical changes in the levels of real output and employment?

Which types of industries are most affected by the business cycle, experiencing the largest declines in output and employment during a recession?

Based on the data in Table 26.1, which U.S. recession since 1950 had the greatest depth, as measured by the percentage decline in real output?

According to the Bureau of Labor Statistics (BLS) survey methodology, how is the labor force defined?

What is the primary criticism regarding how the Bureau of Labor Statistics (BLS) handles discouraged workers in its unemployment statistics?

Which type of unemployment consists of workers who are either searching for jobs or waiting to take jobs in the near future?

How do economists define the full-employment rate of unemployment, also known as the natural rate of unemployment (NRU)?

What is the economic cost of unemployment, as described in the text?

Okun’s law quantifies the relationship between the unemployment rate and the GDP gap. According to recent estimates of Okun's law, for every 1 percentage point that the actual unemployment rate exceeds the natural rate, a negative GDP gap of how much occurs?

In a given year, a country has a total population of 500, a population under 16 or institutionalized of 120, and a population not in the labor force of 150. If there are 23 unemployed people, what is the unemployment rate?

If a country's natural rate of unemployment is 5 percent and its actual unemployment rate is 9 percent, what is the size of the GDP gap according to Okun's law?

What does inflation do to the purchasing power of money?

If the Consumer Price Index (CPI) was 201.6 in 2006 and 207.3 in 2007, what was the rate of inflation for 2007?

What type of inflation is described as 'too much spending chasing too few goods'?

What is the major source of cost-push inflation, according to the text?

In the context of inflation, what is the difference between nominal income and real income?

According to the text, which group is hurt by unanticipated inflation?

If the price level increases by 6 percent in a year and your nominal income increases by only 2 percent, what is the approximate change in your real income?

What is the relationship between the real interest rate, the nominal interest rate, and the inflation premium?

If a lender charges a nominal interest rate of 11 percent and the expected rate of inflation is 6 percent, what is the real interest rate?

According to the text, what is the effect of cost-push inflation on real output?

Using the 'rule of 70,' how long would it take for the price level to double if inflation persisted at 10 percent per year?

In the context of the business cycle, which of the following is an example of a shock that could cause a fluctuation in economic activity?

What is the primary reason structural unemployment occurs?

Based on Table 26.2, which demographic group had the highest unemployment rate in 2007?

What is the definition of hyperinflation?

What is the ratchet effect as it relates to the price level?

Who is most likely to be helped or be unaffected by unanticipated inflation?

What is the Consumer Price Index (CPI)?

A household saves one thousand dollars in a certificate of deposit (CD) at 6 percent annual interest. If inflation is 13 percent, what is the approximate real value of the one thousand dollars at the end of the year?

What is a key difference between frictional and structural unemployment?

According to Table 26.1, which U.S. recession since 1950 had the longest duration?

If a nation's potential GDP is five hundred billion dollars and its actual GDP is four hundred fifty billion dollars, what is the size of the GDP gap?

What are the effects of unanticipated deflation on fixed-income receivers and creditors?

Which of the following is NOT a reason provided in the text for the downward inflexibility of prices, which contributes to the ratchet effect?

What is the defining characteristic of cost-push inflation?

If a country's potential GDP is five hundred billion dollars, and Okun's law suggests it is sacrificing two hundred five billion dollars of real output, what can be inferred about its unemployment rate, assuming the natural rate is 6.0 percent?

What is the primary reason that industries producing nondurable goods and services are somewhat insulated from the effects of a recession?

What is the primary argument against using a zero inflation rate as a policy goal?

At the trough of a business cycle, what is the state of output and employment?

If a nation's potential GDP is eight hundred billion dollars, and it has a negative GDP gap of 4 percent, what is its actual GDP?

Which of the following is an example of someone who is frictionally unemployed?

What does the text identify as the main cause of the exceptionally high unemployment rates in some European economies?

How did the stock market crash of 1929 contribute to the onset of the Great Depression, according to the 'Last Word' section?

What is the primary conclusion of the 'Last Word' section regarding the use of stock prices as a predictor of changes in real GDP?

If the price level is stable and the nominal interest rate is 5 percent, what is the real interest rate?

What is meant by a 'positive' GDP gap?

In the 'Last Word' section on stock markets, what is described as the 'wealth effect'?