Economic Trends During Recessions

During recessions all of the following usually happen EXCEPT

• inflation increases.

• inflation decreases.

• unemployment increases.

• GDP decreases.

All of the following people are considered employed EXCEPT

• Jen, a nurse at a hospital, has been home sick for the last two weeks.

• Harold, who began his job three weeks ago on his 15th birthday.

• Peter, who only worked at his job for three hours last week.

• John, who has been on vacation from his job for one week.

In the long run, the economy of the United States has

• steadily declined over time.

• behaved in ways that cannot be explained by modern macroeconomists.

• experienced drastic fluctuations, but it is back to its old levels now.

• steadily grown over time.

The business cycle describes the fact that

• an economy’s level of output fluctuates between times of recession and expansion

• unemployment levels are constantly changing.

• inflation rates are constantly changing

• politicians usually pass laws that cause the economy to react in unpredictable ways.

High levels of unemployment combined with high levels of inflation could indicate that the business cycle has entered into a period of –

• Stagflation

• Recession

• Expansion

• Investment

An expansionary period in the business cycle is distinguished by —

• declining sales

• fewer excise taxes

• Low unemployment

• declining sales

Economic growth would most likely result from —

• Increased employment

• Increased productivity

• Decreased sales of stock

• Decreased trade

If businesses can decrease the amount of labor needed to increase inventories, the result will most likely be —

• Increased taxes

• Increased inflation

• Decreased productivity

• Economic growth

The introduction of new manufacturing technologies generally affects economic growth by —

• Creating safer work environments

• Increasing the productivity of labor

• Restricting growth because of the additional expense

• Stopping production while workers learn the new technology

One of the advantages corporations have that sole proprietorships do not is —

• Limited liabilities

• Ease of startup

• Rights to all profits

• Lack of special taxes