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A business cycle is the period of time in which
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there are alternating periods of growth and contraction
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The ____________ phase of the business cycle follows a recession
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trough
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Variables that change before real GDP changes are measured by the:
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index of leading indicators
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Which of the following is a lagging indicator
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ALL OF THESE
1. outstanding commercial loans
2. duration of unemployment
3. prime rate
1. outstanding commercial loans
2. duration of unemployment
3. prime rate
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Civilian labor force consists of
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people 16 years and older who are employed or actively seeking a job (excluding members of the armed forces, homemakers, discouraged workers, and others not in the labor force)
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A criticism of the unemployment rate is that:
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the data includes part-time workers as fully employed and does NOT count discouraged workers
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The number of people officially unemployed is not the same as the number of people who can't find a job because
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discouraged workers are not counted
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Frictional unemployment refers to
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workers who are between jobs
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A mismatch of the skills of unemployed workers and the skills required for existing jobs is defined as
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structural unemployment
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Unemployment caused by a recession is called
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cyclical unemployment
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Full employment occurs when the rate of the unemployment consists of
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structural plus frictional unemployment
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The GDP gap is the difference between
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actual real GDP and full-employment real GDP
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A recession is a business contraction lasting at least
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6 months (2 quarters)
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Which of the following is the correct formula for determining the civilian unemployment rate?
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[(the number of unemployed, working-age civilians seeking work)/(the number of civilians in the labor force)] x 100
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When is the GDP gap largest?
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During trough periods in the business cycle
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A person who has given up searching for work is called
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a discouraged worker
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Sam is a musician who is out of work because electronic equipment replaced live musicians. This is an example of
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structural unemployment
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Consider a broom factory that permanently closes because of foreign competition. If the broom factory's workers cannot find new jobs because their skills are no longer marketable, then they are classified as
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structurally unemployed
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The increase in unemployment associated with a recession is called
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cyclical unemployment
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Which of the following are true?
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ALL OF THESE
1. The GDP gap is the difference between full-employment real GDP and actual real GDP
2. We desire economic growth because it increases the nation's standard of living
3. Economic growth is measured by the annual percentage increase in a nation's real GDP
4. Discouraged workers are a reason critics say the unemployment rate is understated
1. The GDP gap is the difference between full-employment real GDP and actual real GDP
2. We desire economic growth because it increases the nation's standard of living
3. Economic growth is measured by the annual percentage increase in a nation's real GDP
4. Discouraged workers are a reason critics say the unemployment rate is understated
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recession
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a downturn in the business cycle which real GDP declines and unemployment rises; at least two consecutive quarters of real GDP decline (also called contraction)
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trough
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real GDP reaches its minimum after falling during a recession
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expansion
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an upturn in the business cycle which real GDP rises (also a recovery)
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peak
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real GDP reaches its maximum after rising during a recovery
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economic growth
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measured by the annual percentage change in real GDP in a nation
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leading indicators
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variables that change before real GDP changes
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lagging indicators
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variables that change after real GDP changes
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coincident indicators
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variables that change at the same time as real GDP changes
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discouraged worker
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a person who wants to work, but who has given up searching for work because he or she believes there will be no job offers
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frictional unemployment
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temporary unemployment caused by the time required of workers to move from one job to another
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structural unemployment
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unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities
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cyclical unemployment
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unemployment caused by the lack of jobs during a recession
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outsourcing
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the practice of a company having its work done by another company in another country
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offshoring
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the practice of having work for a company performed by the company's employees located in another country
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GDP gap =
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actual real GDP - potential real GDP
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