ECON Quiz 3: Lessons 6 & 7

What are the FOUR phases of the business cycle, in order?

• Expansion, Peak, Contraction, Trough

• Expansion, Recession, Recovery, Boom

• Growth, Decline, Recovery, Stagnation

• Peak, Expansion, Decline, Recovery

What are some of the FACTORS that individuals and businesses consider when making decisions in the business cycle?

• Prices, production, and consumption.

• Weather patterns and climate change.

• Personal hobbies and entertainment choices.

• Historical events and ancient civilizations.

During the business cycle, business owners who expect consumers to spend MORE in the near future may decrease production and lay off workers.

• True

• False

What might happen if there is a widespread and long-lasting decrease in consumer spending during the business cycle?

• Suppliers might be forced to cut production and to lay off workers.

• Consumers might increase their spending on luxury goods.

• The government might lower taxes for all citizens immediately.

• Suppliers might hire more workers to meet increased demand.

Which of the following is NOT an indicator used by economists to forecast the business cycle?

• Unemployment

• Inflation

• Weather patterns

• Consumer confidence

GDP stands for ________ and measures the total dollar value of goods and services produced by the economy.

• Gross Domestic Product

• General Domestic Product

• Gross Domestic Price

• Global Domestic Product

Refer to the graph of Real GDP here.

A negative value on the vertical y-axis (up-down) indicates which of the following about the economy?

• The economy is experiencing a contraction or recession.

• The economy is growing rapidly.

• The economy is at full employment.

• The economy is experiencing inflation.

GDP GROWTH means:

• More goods and services, resulting in a wealthier nation

• Less goods and services, resulting in a poorer nation

• Higher unemployment

• Preventing recessions

Economic stability involves controlling ______ and preventing ______.

• inflation, recessions

• taxes, unemployment

• exports, imports

• interest rates, investments

Securing financial markets means having stable banks and stock markets to build consumer and producer ______ the economy.

• confidence in

• confusion over

• uncertainty about

• doubt in