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Business Cycles and Fluctuations Flashcards

Business fluctuations are systematic increases and decreases in real GDP.
FALSE
A recession is the period in which real GDP declines for two consecutive quarters.
TRUE
A key gauge of future U.S. economic activity declined 0.5% last month, as the Sept. 11 terrorist attacks in New York and Washington weakened an already troubled economy.

The Conference Board said Monday its index of leading economic indicators fell to 109.2 in September,…the largest one-month decline since January 1996…. The index indicates where the overall U.S. economy is headed in the next three to six months….

The economy had been struggling for several months before the Sept. 11 attacks. Many economists have said they believe that a recession is unavoidable with the new uncertainties raised by the disaster.

Source: “Leading Indicators Decline,” USAToday.com, October 22, 2001.

The passage discusses a business fluctuation influenced by

a.capital expenditures
b.monetary factors.
c.innovation.
d.external shock.

d.external shock.
A severe recession with high unemployment, acute shortages, and excess manufacturing capacity is known as
a.a trend line.
b.a depression.
c.a trough.
d.a business fluctuation.
b.a depression.
A recession is the period in which real GDP increase over two consecutive quarters.
FALSE
The index of leading indicators
a.predicted the Great Depression.
b.is completely reliable.
c.is used to predict changes in business cycles.
d.was designed to detect external shocks.
c.is used to predict changes in business cycles.
Which of the following is one of the five causes of a business cycle?
a.decrease in consumer demand
b.external shocks
c.recession
d.none of the above
b.external shocks
All of the following factors contribute to business cycles EXCEPT
a.capital spending.
b.business fluctuations.
c.inventory adjusting.
d.industrial innovation.
b.business fluctuations.
business cycles
systematic upturns and downturns of real GDP
recession
period during which real GDP declines for two quarters in a row, or six consecutive months
trough
point in a business cycle when real GDP stops decreasing
peak
point in a business cycle when real GDP stops increasing

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