Cards in this guide (52)
Frictional unemployment
it takes workers some time to move from one job to another
Cyclical unemployment
associated with the business cycle, like during recessions
Structural unemployment
workers possess skills that aren't in high demand (obsolete)
Seasonal unemployment
the demand for some workers varies over the year (lifeguards)
Underemployment
workers that are highly skilled but in low paying jobs, part time workers
The two primary players in the circular flow model are:
Households and businesses
What is the driving force behind the circular flow of the market economy
What do businesses provide for the outside parties
What are the technical terms for the two main parties in the model
What are the resources employed to produce goods and services
In the circular flow of a market economy, the working model assumes that three sectors of a normal economy do not exist. These are the financial sector, the overseas sector, and the _________ sector.
The circular flow of a market economy also assumes that consumers spend all their money on goods, services, and consumptions. This means that there is no _________ on the part of the consumer.
Businesses provide an _________ to households through employment.
___________ is the driving force behind the production of goods and services.
The ___________ is where businesses buy the materials and labor needed to produce their product.
How is income created
money is spent or invested
How many sectors make up the economy
What are the sectors named in the youtube video
households, financial, firms, government, international trade
Is the US a closed economy
What is a closed economy
An economy that does not import or export goods
What are the roles of the household sector
To spend income and consume
What is the financial sector composed of
Is a household a leakage or injection
Is a firm a leakage or injection
Does the government always spend the same exact amount of money it receives
What do you do if you want to make more money
Inject more money into the economy
Real GDP is not changing at all, unemployment is about 8%, and inflation is steady. Where in the business cycle is the economy
Unemployment that is directly related to swings in the business cycle is:
According to the demand-pull theory, inflation is caused by:
Real GDP is rising at a 5% rate, unemployment is at 6% and falling, and inflation is rising at about 2% per year. Where in the business cycle is the economy
Business investment, a leading economic indicator, is falling. What is the likely prospect for the future economy
According to the cost-push theory, inflation is caused by:
Nominal GDP
the raw measurement that leaves price increases in the estimate
Real GDP
a measurement of economic output minus the effects of inflation or deflation, gives a more realistic assessment of growth
Contraction (business cycle)
economic growth weakens and becomes a recession
Expansion (business cycle)
the economy starts growing again and towards the end of this cycle the economy overheats and inflation rises
Peak (business cycle)
the last month and quarter of growth before the recession starts
Procyclic economic indicator
moves in the same direction as the economy
Countercyclic economic indicator
moves in the opposite direction as the economy
Acyclic economic indicator
no relation to the health of the economy
Leading indicator
changes before the economy changes (stock market returns)
Lagging indicator
doesn't change direction until a few quarters after the economy does (unemployment rate)
Coincident indicator
moves at the same time as the economy does (GDP)
Prime rate
interest rate banks charge their best customers
Consumer price index (CPI)
a measure that examines the weighted average of prices of a basket of consumer goods and services
Core inflation
reflects the long-term trend in a particular price level
The natural rate of unemployment does NOT include which of the followinga. seasonalb. structuralc. frictionald. cyclical
The natural rate of unemployment does NOT include which of the following a. seasonal b. structural c. frictional d. cyclical
Which of the following is characteristic of a "good" economy a. unemployment of about 8% b. inflation of about 5% annually c. real GDP growth of about 4% annually d. tax rates of about 80%
c. real GDP growth of about 4% annually
What is the most likely result of an increase in interest rates a. investment spending rises b. investment spending falls c. the economy speeds up d. unemployment falls
b. investment spending falls
What is the likely result of deflation a. economic growth b. high unemployment c. rising prices d. high tax rates
