Macro #2: Business Cycle & GDP

Which of the following factors would be an indicator of a healthy economy?

• GDP growth at 3.5%

• Unemployment at 10%

• Wages stagnating

• Stock prices declining

We never really know where we are at in the business cycle, but economists can attempt to predict using measures of economic health.

• True

• False

This economic model is called:

• The business cycle

• Supply & demand

• Production Possibilities Curve

• Circular Flow Model

Points 1 and 4 represent

• Peaks and expansion

• Troughs and recession

• Peaks and depression

• Contraction and expansion

Point 2 represents

• Contraction

• Expansion

• Peak

• Trough

Point 3 represents

• Trough

• Expansion

• Peak

• Depression

Which recent historical event most represents Point 2 and 3 on the chart?

• Great Recession

• Current Economy

• Great Depression

• "Dot Com" Boom of the early 2000s

What is the biggest difference between a "recession" and a "depression"?

• Length and severity of economic contraction

• Depressions are more frequent than recessions

• Depressions only happen when banks fail

• Recessions are more severe than depressions

SELECT ALL THAT APPLY: Which of the following are factors that can expand or contract the economy?

• Business investment

• Interest rates and credit

• Consumer expectations

• External Shocks

A decline in business spending results in a decline in GDP

• True

• False