Term
True or False?
Over time, the U.S. economy has experienced constant long-run economic growth. |
|
Definition
FALSE.
Over time, the U.S. economy has experienced long-run economic growth, but this
growth has not been constant because of the business cycle. |
|
|
Term
True or False?
The U.S. Congress announces U.S. business cycle dates. |
|
Definition
FALSE.
The Business Cycle Dating Committee of the National Bureau of Economic Research
(NBER), a private research group, announces U.S. business cycle dates. |
|
|
Term
True or False?
Business cycles are irregular and unpredictable. |
|
Definition
|
|
Term
True or False?
Stock indexes typically rise before the beginning of a recession and fall before the beginning of an
expansion. |
|
Definition
FALSE.
Stock indexes typically rise before the beginning of AN EXPANSION and fall before the
beginning of A RECESSION. |
|
|
Term
True or False?
Changes in the inflation rate drive economies into recessions and expansions. |
|
Definition
FALSE.
Changes in SPENDING BY HOUSEHOLDS AND FIRMS drive economies into recessions
and expansions. |
|
|
Term
Which types of products are most likely to be affected by the business cycle?
1. durable goods
2. nondurable goods
3. services
4. goods purchased by the government |
|
Definition
|
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Term
True or False?
The inflation rate and the interest rate both tend to rise during expansions and fall during recessions. |
|
Definition
|
|
Term
Near the end of an expansion, savers _____ stocks and _____ bonds.
1. sell; sell
2. sell; buy
3. buy; sell
4. buy; buy |
|
Definition
|
|
Term
True or False?
Savers prefer to buy bonds when their interest rates are low. |
|
Definition
FALSE.
Savers prefer to buy bonds when their interest rates are HIGH. |
|
|
Term
True or False?
Unemployment rises almost immediately during a recession, but does not fall until well into an
expansion. |
|
Definition
|
|
Term
True or False?
When discouraged workers return to the labor force during an expansion, the unemployment rate
decreases. |
|
Definition
FALSE.
When discouraged workers return to the labor force during an expansion, the
unemployment rate INCREASES. |
|
|
Term
True or False?
During the early stages of a recovery, firms usually rush to hire new employees before other firms can
hire them. |
|
Definition
FALSE.
During the early stages of a recovery, firms are usually reluctant to hire new employees. |
|
|
Term
Near the end of a recession, households and firms have _____ their debt, and the _____ interest rate
gives both households and firms an incentive to borrow to finance new spending.
1. increased; higher
2. increased; lower
3. reduced; higher
4. reduced; lower |
|
Definition
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