Annes Newton - G00378073 -- Macro Economics -- 3/16/2021 - Quiz 4
Short-Essay Questions.
1. List the four phases of a complete business cycle.
The four phases of the business cycle are: peak, recession, trough, and expansion
2. How does the Bureau of Labor Statistics measure unemployment rate?
The Bureau of Labor statistics measures unemployment rate by dividing the number of unemployed individuals by the number of individuals currently employed in the labor force.
3. Discuss the difference between frictional, structural, and seasonal unemployment. Try to mention why workers lose their job under each of them.
The difference between frictional, structural and seasonal unemployment is that Frictional unemployment arises when workers are searching for new jobs or are transitioning from one job to another, Structural unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand and seasonal unemployment results from regular changes in the season for instance : some persons are employed in a mall to portray Santa Clause only during the holiday season.
4. Do structurally unemployed workers remain for a long period of time?
Structural unemployment is long-lasting unemployment that comes about due to shifts in an economy.
5. What is inflation and how is the rate of inflation measured?
Inflation is an increase in the level of prices of the goods and services that households buy and is measured as the rate of change of those prices.
6. Compare and contrast demand - pull inflation and cost -- inflation.
Demand-pull inflation happens when the aggregate demand increases at a faster rate than aggregate supply, whereas Cost-Push Inflation is a result of an increase in the price of inputs due to the shortage of cost of production, leading to decrease in the supply of outputs.
7. Describe the relationship between personal consumption expenditure and disposable income.
The relationship between the two is as, consumption increases as current income increases. and the larger the marginal propensity to consume, the more sensitive current spending is to
Page 1
current disposable income. The smaller the marginal propensity to consume, the stronger is the consumption-smoothing effect.
8. What is a break-even level of income? Indicate this using graph
The break-even level represents the sales amount in either quantity or sales, It is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break-even point is zero.
ota
#
tiad Costs
BreaKevenpoint units
9. Define the average propensity to consume (APC) and average propensity to save (APS)
The average propensity to consume can be defined as the percentage of income spent on goods and services by an individual and the average propensity to save is the proportion of income that is saved rather than spent on goods and services.
Page