What are the four phases of a business cycle? Expansion, peak, decline, recovery Peak, contraction, trough, expansion Growth, decline, recovery, recession Boom, bust, recovery, stagnation

Peak, contraction, trough, expansion

What is the rule of thumb for classifying an economic expansion or contraction? A year of stable inflation rates Three consecutive months of rising or declining employment Two consecutive quarters of rising or declining real GDP One quarter of rising or declining real GDP

Two consecutive quarters of rising or declining real GDP

What is the relationship between consumption and investment during the business cycle? Investment changes by a larger proportion than consumption Consumption changes by a larger proportion than investment Both consumption and investment change equally Neither consumption nor investment change significantly

Investment changes by a larger proportion than consumption

How does the unemployment rate behave during recessions and expansions? Unemployment fluctuates randomly during both phases Unemployment falls during recessions and rises during expansions Unemployment remains constant during both phases Unemployment rises during recessions and falls during expansions

Unemployment rises during recessions and falls during expansions

What does Okun's law illustrate about the relationship between unemployment and real GDP? A slight change in unemployment leads to a large change in real GDP Real GDP changes independently of unemployment A greater change in unemployment is needed for a slight change in real GDP Unemployment and real GDP are unrelated

A greater change in unemployment is needed for a slight change in real GDP

What is the formula for Okun's law? \[ \% \Delta RGDP = 3\% + 2(\Delta \text{Unemployment Rate}) \] \[ \% \Delta RGDP = 2\% - 3(\Delta \text{Unemployment Rate}) \] \[ \% \Delta RGDP = 3\% - 2(\Delta \text{Unemployment Rate}) \] \[ \% \Delta RGDP = 2\% + 3(\Delta \text{Unemployment Rate}) \]

\[ \% \Delta RGDP = 3\% - 2(\Delta \text{Unemployment Rate}) \]

Understanding Economic Concepts: Growth, Cycles, and Policies

Flashcard

Learn Mode

Match

Library

Create

Flashcards

Library

Match (Coming Soon)

Economics - Macroeconomics

georgepetenjk Created by 10 mon ago

Cards in this deck(95)

What is the formula for calculating economic growth?

What are the four phases of a business cycle?

What is the rule of thumb for classifying an economic expansion or contraction?

What is the relationship between consumption and investment during the business cycle?

How does the unemployment rate behave during recessions and expansions?

What does Okun's law illustrate about the relationship between unemployment and real GDP?

What is the formula for Okun's law?

What does long-run economic growth depend on?

What does short-run economic growth or fluctuations depend on?

What is one method to forecast short-run fluctuations in the economy?

What are leading indicators and provide examples?

The lowest point of a business cycle is known as the ____.

What does classical macroeconomic theory emphasize?

What does Keynesian macroeconomic theory emphasize?

What is the classical dichotomy in economics?

What three factors can affect aggregate demand?

What is aggregate demand?

What is the relationship between money supply and aggregate demand (AD)?

What is the relationship between the currency-to-deposit ratio and aggregate demand (AD)?

What is aggregate supply (AS)?

How do the long-run aggregate supply curve (LRAS) and short-run aggregate supply curve (SRAS) differ?

How do changes in aggregate demand (AD) affect the long-run and short-run aggregate supply curves?

What is a shock in economic terms, and what type of shocks do not exist in the long run?

What is stabilization policy, also known as counter-cyclical policy?

What are four causes of supply shocks?

What are the effects of an adverse supply shock, also known as stagflation?

Whose ideas formed the basis of the IS-LM model?

What does the IS curve represent in economic terms?

What does the LM curve represent in economic terms?

What is the link between the goods/services market and the money market?

What does the IS graph look like in terms of its axes?

What is the difference between actual expenditure and planned expenditure?

What happens when there is a difference between actual expenditure and planned expenditure?

What is the relationship between income and planned expenditure?

What does the slope of the planned expenditure line represent?

What does the marginal propensity to consume (MPC) represent?

What is the equilibrium point of the Keynesian Cross Model?

How is actual expenditure represented in the Keynesian Cross Diagram?

How can planned expenditure (PE) be increased or shifted upwards?

What does the spending multiplier show?

What is the formula for the spending multiplier?

What does the tax multiplier show?

What is the formula for the tax multiplier?

What is the relationship between interest rate and output/income, and why?

What is the relationship between planned expenditure and the IS curve?

What does the LM curve look like in terms of its axes?

What is Keynes' Theory of Liquidity Preference?

What is the relationship between demand for real balances, income, and interest rate?

What is the relationship between money supply and the LM curve?

How can fiscal policy be used to expand production and employment?

How can fiscal policy be used to contract production and employment?

What is the relationship between price level and the LM curve?

How will production and unemployment change in the long run if there is no change in money supply?

In the long run, how will the interest rate change when money demand is increased?

How will production and income change in the short run (sticky prices) from an increase in taxes?

If you were interested in studying fluctuations in production and income (i.e., the business cycle), you would want to use the ____.

According to the Keynesian monetary transmission mechanism, what happens when the money supply increases?

What determines the slope of the aggregate supply curve?

What are the two models that explain deviations in the price level from the expected price level?

What is the sticky price model?

What is the imperfect information model?

According to the imperfect information model, what does the aggregate supply curve look like when the actual price level falls below the expected price level and the value of alpha is zero?

What does the Phillips curve show?

According to the Phillips curve, what are the three factors that the rate of inflation depends on?

What are adaptive expectations?

What is the natural rate of unemployment also known as?

What happens during an adverse supply shock?

What happens during a beneficial supply shock?

What does the long-run Phillips curve look like?

What is the sacrifice ratio?

According to the theory of rational expectations, what should the sacrifice ratio be?

What is the hypothesis of hysteresis in economics?

If hysteresis is correct, how might the sacrifice ratio be affected?

What is an automatic stabilizer in economic policy?

What are examples of automatic stabilizers?

What is the Lucas Critique in economic policy evaluation?

What is a political business cycle?

What is time inconsistency in economic policy, and provide an example?

What are discretionary rules in economic policy?

What has historically been the main cause of government debt?

What is the second main cause of government debt?

How has the size of the national debt been changing over time?

Why is the national debt expected to rise even faster in the future?

What are three ways to finance deficits?

What is a contingent liability, and provide an example?

What does Ricardian Equivalence argue about tax cuts and consumer spending?

What is tax smoothing in fiscal policy?

What is intergenerational redistribution in terms of budget deficits?

What are menu costs in economics?

What does a positive supply shock do to cost and production?

What does a negative supply shock do to cost and production?

What is the 'self-correcting mechanism' in the AD-AS framework?

What is stagflation?

What causes shifts in actual expenditure (45-degree line)?

What is the political business cycle goal for normal people?

Ask Our AI Tutor

Get Instant Help with Your Questions

Need help understanding a concept or solving a problem? Type your question below, and our AI tutor will provide a personalized answer in real-time!

How it works

Ask any academic question, and our AI tutor will respond instantly with explanations, solutions, or examples.

Get Started

Browse questions and discover topic-based flashcards
Practice with engaging flashcards designed for each subject
Strengthen memory with concise, effective learning tools

Discover By Topic

Understanding Economic Concepts: Growth, Cycles, and Policies

Related Decks