Deck 7: Introduction to Business Cycles

Question 1

Many economists argue that the unemployment rate tends to understate the actual amount of unemployment. Why?

A) The unemployment rate excludes persons who work in the service sector.
B) The unemployment rate excludes persons who are unable to find work.
C) The unemployment rate excludes persons who want to work but have given up looking for a job.
D) The unemployment rate excludes workers who are also students.

Answer 1

C

Question 2

Progressive economists such as Wesley Mitchell

A) showed that capitalist economies often do not produce equilibrium but do produce a business cycle with booms and busts.
B) claimed that the internal workings of market capitalism produce an economy without booms or busts or price inflation that the market could not correct quickly.
C) claimed that unemployment and inflation are caused by factors external to the economy and are not due to how the economy itself operates.
D) argued that aggregate demand must always equal aggregate supply at any level of supply.

Answer 2

A

Question 3

Wesley Mitchell made a study of business cycles and found that booms and busts

A) occur in all types of economies.
B) only occur under capitalism.
C) were more severe in the feudal period.
D) occur more often in a barter system.

Answer 3

B

Question 4

Wesley Mitchell coined the concept of a cycle relative. What is a cycle relative?

A) The cycle relative is defined as the average of an economic series for one whole cycle.
B) The cycle relative is defined as the original data in a stage divided by the number of stages.
C) The cycle relative is defined as the original data in a stage divided by the cycle base.
D) The cycle relative is defined as the relative number of stages in a cycle.

Question 5

Wesley Mitchell divided the business cycle into 9 stages. Mitchell called the lowest stages of the cycle

A) the initial peak and the initial contraction.
B) the initial trough and the final trough.
C) the cycle relative and the cycle base.
D) the amplitude and the capacity.

Question 6

What is meant by the cycle base?

A) The original data in a stage divided by the cycle relative.
B) The capacity utilization during the initial trough.
C) The average of an economic series for one whole cycle.
D) The lowest point of the cycle.

Question 7

Table 41a

-Table 41a gives quarterly GDP data for a complete business cycle. Using Mitchell's terminology, what is the value for Stage 1?

A) $3,759.8 billion
B) $4,237.6 billion
C) $4,373.3 billion
D) $4,147.5 billion

Question 8

Table 41a

-Table 41a gives quarterly GDP data for a complete business cycle. Using Mitchell's terminology, what is the value for the cycle base?

A) $3,759.8 billion
B) $4,237.6 billion
C) $4,373.3 billion
D) $4,147.5 billion

Question 9

Table 41a

-Table 41a gives quarterly GDP data for a complete business cycle. Using Mitchell's terminology, what is the value for Stage 5?

A) $3,759.8 billion
B) $4,237.6 billion
C) $4,373.3 billion
D) $4,147.5 billion

Question 10

Table 41a

-Table 41a gives quarterly GDP data for a complete business cycle. Using Mitchell's terminology, what is the value for Stage 9?

A) $3,759.8 billion
B) $4,237.6 billion
C) $4,373.3 billion
D) $4,147.5 billion

Question 11

Table 41a

-Table 41a gives quarterly GDP data for a complete business cycle. Using Mitchell's terminology, what is the value for the cycle relative for Stage 1?

A) 105.4
B) 90.6
C) 86.2
D) 55.1