Macro Ch.6 Flashcard Example #19543

Business cycle
Alternating periods of economic growth and contraction, which can be measured by changes in real GDP.
Civilian labor force
The number of people 16 and older who are employed or who are actively seeking a job, excluding armed forces, homemakers, discouraged workers, and other persons not in the labor force.
Coincedent indicators
Variables that change at the same time that real GDP changes.
Cyclical unemployment
Unemployment caused by the lack of jobs during a recession.
Discouraged worker
A person who wants to work, but has given up searching for work because he or she believes there will be no job offers.
Economic growth
An expansion in national output measured by the annual percentage increase in a nations real gdp.
Frictional unemployment
Unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labor force, reentering the labor force, or seasonally unemployed.
Full employment
The situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates. Also called the natural rate of unemployment.
GDP Gap
The difference between full-employment real gdp and actual real gdp.
Lagging indicators
Variables that change after real GDP changes.
Leading indicators
Variables that change before real GDP changes
Peak
The phase of the business cycle in which real GDP reaches its maximum after rising during a recovery
Recession
A downturn in the business cycle during which real GDP declines and the unemployment rate rises. Also called a contraction
Recovery
An upturn in the business cycle during which real GDP rises. Also called an expansion.
TrueStructural unemployment
Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities
Trough
The phase of the business cycle in which real GDP reaches its minimum after falling during a recession.
Unemployment rate
The percentage of people in the civilian labor force who are without jobs and are actively seeking jobs
True or false, the term recovery, refers to the maximum point of the business cycle.
false
True or false, the civilian labor force includes only the employed.
false
True or false, to be counted as unemployed, a person must be looking for a job
true
True or false, when the actual real GDP output is below full employment real GDP, the GDP measures the cost of cyclical unemployment.
false
True or false, the natural rate of unemployment exists when cyclical unemployment equals zero
true
What stage of the business cycle immediately follows the trough?
Recovery
The governments chief forecasting gauge for business cycles is the:
index of leading indicators
What is an example of something that is not a lagging indicator
Stock prices
Suppose thr official unemployment rate is ten percent
we can conclude without question that:
one of every ten people in the civilian labor force is currently unemployed
Sally lost her job when her company went out of business because of a recession. This is an example of:
cyclical unemployment
The phases of a business cycle are:
peak, recession, trough and recovery
What is an example of something that is not a variable in the index of leading indicators?
prime rate
What are three coincident indicators?
personal income, industrial production, manufacturing and trade sales
People who are not working will be counted as employed if they are:
on vacation, absent due to weather or absent due to labor dispute
Three reasons that the number of people officially unemployed is not the same as the number of people who cant find a job are:
people with jobs look for better ones, armed forces are included, discouraged workers are not counted
Frictional unemployment applies to:
short periods of unemployment needed to match jobs and job seekers
Structural unemployment is caused by:
shifts in the economy that make certain job skills obsolete
Unemployment caused by a recession is:
cyclical unemployment
The sum of the frictional and structural unemployment rates is equal to the:
full employment unemployment rate
True or false, full employment exists in an economy when the unemployment rate equals the sum of frictional and structural unemployment rates
True
What group has the highest unemployment rates?
Teenagers
The economy is considered to be at full employment when:
the rate of cyclical unemployment is zero
the length of time between the peak and the trough is the:
duration of the recession
Real GDP Equals?
Real GDP equals C plus I plus G plus the sum of X minus M
Unemployment rate equals?
Unemployment rate equals unemployed divided by civilian labor force times 100
What are 4 causes of structural unemployment?
lack of education, changes in consumer demand, technological advances and globalization
What is the conclusion?
The gap between actual and potential real gdp measures the monetary losses of real goods and services to the nation from operating at less than full employment.

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