Exam 9: Business Cycles, Unemployment, and Inflation

Cost-push inflation increases real output and employment.

Rising per-unit production costs are most directly associated with

During a severe recession, we would expect output to fall the most in

A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

An unexpected increase in total spending will cause an increase in GDP

The percentage change in one's real income can be approximated by

The GDP gap measures the difference between

Inflation is undesirable because it

If both the real interest rate and the nominal interest rate are 3 percent, then the

What are the effects of cost-push inflation on real output?

Compared to other industrial nations, inflation rates in the United States are

What has been the range of the decline in real output during recessions in the U.S. between 1950 and 2009?

The phrase "too much money chasing too few goods" best describes

Unanticipated inflation benefits debtors at the expense of creditors.

The phase of the business cycle in which real GDP declines is called

A recession is defined as a situation where the average price level in the economy is increasing.

An annual rate of inflation of 7 percent will double the price level in about 15 years.

When the economy goes into a recession and firms require less labor, managers tend to

Potential Real GDP \ 200 Billion Natural Rate of Unemployment 6\% Actual Rate of Unemployment 12\% Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. The amount of output being forgone by the economy is

If Fred's annual real income rises by 8 percent each year, his annual real income will double in about