Business Cycle and Unemployment Flashcard

Front

What are the four phases of the business cycle?

Back

Expansion, peak, contraction, and trough

Front

Explain the difference between expansion and peak in the business cycle.

Back

Expansion is the period of economic growth, while peak is the highest point of economic activity before a downturn.

Front

What are the two main types of unemployment?

Back

Frictional unemployment and structural unemployment

Front

Describe the characteristics of structural unemployment.

Back

Mismatch between skills and job requirements.

Front

What are the causes of cyclical unemployment?

Back

Fluctuations in the business cycle

Front

How does a recession contribute to cyclical unemployment?

Back

Recession leads to decreased demand for goods and services, causing businesses to reduce production and lay off workers, contributing to cyclical unemployment.

Front

What are the two main methods used to measure the unemployment rate?

Back

Household survey and establishment survey

Front

Explain the concept of labor force participation rate.

Back

Percentage of the working-age population that is either employed or actively seeking employment

Front

How does high unemployment rate affect consumer spending?

Back

Decreases consumer spending

Front

Discuss the impact of long-term unemployment on the economy.

Back

Long-term unemployment can lead to a decrease in consumer spending, lower tax revenues, and increased government spending on social welfare programs.