Exam 11: The Business Cycle, Unemployment, and Inflation

The leading economic indicators do not include

If the consumer price index rises, the

If interest rates fall, homeowners with conventional mortgages see a drop in their monthly payments.

Cost-push inflation would occur if productivity increases faster than wages.

Looking at the business cycle, the low point of real GDP, just before it begins to turn up, is called the recession.

Allison quit her job at Wal-Mart in Oklahoma and moved back in with her parents in Massachusetts. She is now looking for work as a cashier. Her type of unemployment is considered to be

An auto worker who is laid off because the economy enters a recession would be frictionally unemployed.

______ is the unemployment that arises from normal labor turnover-that is, from people being "between jobs."

Economists call the level of unemployment at which there is no frictional unemployment the natural rate of unemployment.

Suppose that in the absence of inflation, a bank is willing to make a mortgage loan for $100,000 at an annual interest rate of 7 percent. If the bank expected the inflation rate to be 4 percent, however, the bank would charge the borrower an annual interest rate of

All of the following groups are harmed by unanticipated inflation except

Europe's approach to labor markets has generally been to protect low-skilled workers by keeping their wages relatively high and penalizing firms for laying them off.

If the consumer price index equaled 170 in 2010 and 173 in 2012, the rate of inflation between the two years would be

For the U.S., frictional unemployment has generally been a more serious problem than structural unemployment.

Economists use leading economic indicators to determine whether the economy is in a recession.

Many economists believe that a change in the ______ is the immediate determinant of domestic output and employment, and thus turning points in the business cycle.

Concerning the business cycles of the U.S., the average recovery has been shorter and less pronounced than the average recession.

Purchases of consumer durable goods tend to decline by relatively large amounts during a recession because

Suppose a bank lends money at what it feels is an appropriate rate of interest for the level of anticipated inflation, but the actual rate of inflation turns out to be much higher than anticipated. Therefore, the bank will realize an unexpected gain in wealth.

Compared to Europe, U.S. labor market policies are more laissez faire and leave labor market arrangements to employers and employees.