The Business Cycle
The period of growth that follows a trough.
What is expansion?
This market basket approach helps determine the inflation rate by comparing past year prices with current prices.
What is the Consumer Price Index or CPI?
The formula for calculating GDP.
What is C + I + G + NX or Consumption + Investment in Capital + Government Spending + Net Exports.
The type of unemployment that results from new workers looking for their first job or people changing jobs.
What is frictional unemployment?
An item that is sold by the United States and bought by other countries.
What is an export?
The highpoint of expansion, when the economy starts to overheat.
What is peak?
This is the stable inflation rate that the US aims for.
What is 2%?
GDP is often used to state this.
What is the standard of living in a country?
The type of unemployment that results from the nature of changes in business and technology.
What is structural unemployment?
A foreign-made product that is bought by the US.
What is an import?
The state of the economy after two successive quarters of contraction.
What is recession?
When inflation occurs because people greatly value a product and are willing to pay more money for it.
What is demand-pull inflation?
Intermediate goods are not counted in GDP due to this idea.
What is double counting?
The type of unemployment that results from work only being needed during certain months of the year.
What is seasonal unemployment?
The United States can produce 10000 books in one workday while China can produce only 500. What does the US have?
What is absolute advantage?
The low point of the business cycle, when the economy is at its worst.
What is trough?
When inflation occurs due to raw material rarity or increased price of production.
What is cost-push inflation?
To ensure that goods are not counted twice, GDP is calculated using only these.
What are final goods?
The unemployment that results due to the shifting of the business cycle.
What is cyclical unemployment?
A CEO can type 100 words a minute while their assistant can type 50 words a minute. What does the assistant have in this situation?
Bonus: Name the reason why this is the case.
What is comparative advantage?
Bonus: Opportunity Cost
There are three major causes of an economic downturn. Name and describe at least one of these causes.
Negative Economic Shock, Land Shortages, High Interest Rates, Saving (half credit)
This type of inflation runs rampant and has occurred during various points in history.
What is hyperinflation?
It does not give a full picture of standard of living
It does not include the value of work done in the home or through volunteering
It does not account for negative externalities such as pollution
It does not include the goods and services purchased on the black market
When an individual with a PhD. in Botany works at a local flower shop.
What is underemployment?
There are three factors that influence whether or not a country has an advantage in producing certain products. Name and describe at least one.
Climate, factors of production, technology.