Business Cycle
The highest point on the BUSINESS CYCLE
PEAK
What is the definition of UNEMPLOYMENT?
The number of people who do not have a job.
Who creates MONETARY POLICY?
The Federal Reserve
Who creates FISCAL POLICY?
The government
What is Gross Domestic Product (GDP)?
the monetary value of all final goods and services produced within a country
The lowest point on the BUSINESS CYCLE
TROUGH
What are the 3 TYPES of UNEMPLOYMENT?
Structural, Cyclical, & Frictional
What type of policy is used during a CONTRACTION & WHY?
Expansionary Policies because the economy is declining and needs to expand/grow bigger
How many districts/banks make up the Federal Reserve?
12 Districts.
What is inflation/Consumer Price Index (CPI)?
Increase or decrease in price level / Inflation Rate
What is it called when the economy is declining quarter after quarter?
Contraction
Give an example of SEASONAL UNEMPLOYMENT.
Santa. Splash in the Boro workers. Holiday workers.
What 2 tools are used with Fiscal Policy?
Taxes and Government Spending
What type of policy is used during an EXPANSION & WHY?
Contractionary policies.
Because the economy is growing too fast and needs to slow down
What is the difference between Nominal GDP and Real GDP?
Real GDP takes inflation into account
What is it called when the economy is increasing quarter after quarter?
Give an example of STRUCTURAL UNEMPLOYMENT.
When your skills don't match the job.
Person replaced by computer.
What is the GOAL of EXPANSIONARY & CONTRACTIONARY MONETARY POLICY?
Increase/Decrease the Money Supply
What 3 tools are used with Monetary Policy?
Reserve Requirements, Discount Rate, Open Market Operations
What is a budget deficit?
When expenses are more than income.
What is the definition of BUSINESS CYCLE?
Growth and decline of an economy as economic activity increases and decreases periodically illustrated in a graph
Give an example of CYCLICAL UNEMPLOYMENT.
Losing job due to a recession
When GDP has increased by 5% and unemployment has gone down to 1%, what type of policy should the government use?
Contractionary Fiscal Policy
What is the GOAL of EXPANSIONARY & CONTRACTIOANRY FISCAL POLICY?
Increase/Decrease Economic Activity
What is unanticipated inflation? Who wins & loses during unanticipated inflation?
Inflation that was not expected.
Winners - borrowers
Losers - lenders & fixed income individuals