Economics and Business Cycles Flashcards
6 cards from real BEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economics and Business Cycles flashcards as text
Which type of unemployment occurs when workers are between jobs or searching for better positions?
Answer: Frictional unemployment
Frictional unemployment refers to the short-term joblessness that occurs when workers are transitioning between jobs or entering the labor market for the first time.
What does GDP measure?
Answer: Total market value of all final goods and services produced within a country in a given period
GDP (Gross Domestic Product) measures the total market value of all final goods and services produced within a country's borders during a specific time period.
During a recessionary gap, actual GDP is:
Answer: Below potential GDP
A recessionary gap exists when the economy's actual output falls short of its potential (full-employment) output, indicating underutilized resources.
Which of the following is an example of an automatic stabilizer?
Answer: Unemployment insurance benefits
Unemployment insurance is an automatic stabilizer because it automatically increases government spending during downturns without requiring new legislation.
The Consumer Price Index (CPI) primarily measures:
Answer: Changes in the price level of a basket of consumer goods and services
The CPI tracks changes in the price level of a fixed basket of goods and services typically purchased by urban consumers, serving as the primary inflation gauge.
When the Federal Reserve increases the federal funds rate, the most likely immediate effect on the economy is:
Answer: Decreased borrowing and reduced spending
Raising the federal funds rate makes borrowing more expensive, which reduces consumer and business spending, thereby slowing economic activity and curbing inflation.