Download - 02 business cycles and unemployment
![Page 1: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/1.jpg)
1
Chapter 16 Business Cycles
and Unemployment• Key Concepts• Summary• Practice Quiz• Internet Exercises
©2000 South-Western College Publishing
![Page 2: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/2.jpg)
2
In this chapter, you will learn to solve these economic puzzles:
What is the difference between a recession and a depression?
Is a worker who has given up searching for work
counted as unemployed?
Can an economy produce more output
than its potential?
![Page 3: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/3.jpg)
3
What is aBusiness Cycle?
Alternating periods of economic growth and contraction, which can be measured by changes in real GDP
![Page 4: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/4.jpg)
4
What are the four phases of a Business Cycle?
• Peak• Recession• Trough• Recovery
![Page 5: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/5.jpg)
5
What is a Peak?The phase of the business
cycle during which real GDP reaches its maximum after rising during a recovery
![Page 6: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/6.jpg)
6
What is a Recession?A downturn in the
business cycle during which real GDP declines
![Page 7: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/7.jpg)
7
What is a Trough?The phase of the business
cycle in which real GDP reaches its minimum after falling during a recession
![Page 8: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/8.jpg)
8
What is a Recovery?An upturn in the
business cycle during which real GDP rises
![Page 9: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/9.jpg)
9
Hypothetical Business Cycle
Peak
Peak
Trough
Recession Recovery
Growth
trend line
Real GDPper year
![Page 10: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/10.jpg)
10
How long before a downturn is a Recession?The Department of Commerce
usually considers a recession to be at least two consecutive quarters in which there is a decline in GDP
![Page 11: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/11.jpg)
11
When is a downturn considered a Depression?
The term depression is primarily an historical reference to the extreme deep and long recession of the early 1930’s
![Page 12: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/12.jpg)
12
What isEconomic Growth?
An expansion in national output measured by the annual percentage increase in a nation’s real GDP
![Page 13: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/13.jpg)
13
Why is Economic Growth one of our nation’s
economic goals?It increases our standard
of living - it creates a bigger “economic pie”
![Page 14: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/14.jpg)
14
What are the three types of Economic Indicators?
• Leading• Coincident• Lagging
![Page 15: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/15.jpg)
15
What is aLeading Indicator?
Variables that change before real GDP changes
![Page 16: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/16.jpg)
16
Leading Indicators
•Changes in business and consumer credit•New orders for plant and equipment•New consumer goods orders•Unemployment claims•Delayed deliveries•New business formed•Average workweek•New building permits•Changes in inventories
•Material prices•Stock prices•Money supply
![Page 17: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/17.jpg)
17
What is aCoincident Indicator?
Variables that change at the same time that real GDP changes
![Page 18: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/18.jpg)
18
Coincident Indicators
•Nonagricultural payrolls
•Personal income
•Industrial Production
•Manufacturing and trade sales
![Page 19: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/19.jpg)
19
What is aLagging Indicator?
Variables that change after real GDP changes
![Page 20: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/20.jpg)
20
Lagging Indicators
•Unemployment rate
•Duration of unemployment rate
•Labor cost per unit of output
•Inventories to sales ratio
•Outstanding commercial loans
•Commercial credit to personal income ratio
•Prime interest rate
![Page 21: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/21.jpg)
21
What causes Unemployment?
When total spending falls, businesses will find it profitable to produce a lower volume of goods and avoid unsold inventory
![Page 22: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/22.jpg)
22
Who is considered Unemployed?
Anyone who is 16 years of age and above who is actively seeking employment
![Page 23: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/23.jpg)
23
Who is considered Employed?
Anyone who works at least one hour a week for pay or at least 15 hours per week as an unpaid worker in a family business
![Page 24: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/24.jpg)
24
What is the Unemployment Rate?
The percentage of people in the labor force who are without jobs and are actively seeking jobs
![Page 25: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/25.jpg)
25
Unemployment rate
unemployedcivilian labor force
X 100=
![Page 26: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/26.jpg)
26
How is the Unemployment Rate calculated?
56,000 households are surveyed each month
![Page 27: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/27.jpg)
27
What is theCivilian Labor Force?
People 16 years or older who are either employed or unemployed, excluding members of the armed forces and people in institutions
![Page 28: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/28.jpg)
28
Total Population age 16 and over
Not in Labor ForceNot in Labor ForceArmed forces
Household workersStudentsRetirees
Persons with disabilitiesInstitutionalized
Discourage workers
Civilian labor forceCivilian labor forceEmployedEmployees
Self-employedUnemployedNew entrantsRe-entrantsLost last jobQuit last job
Laid off
![Page 29: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/29.jpg)
29
Who is aDiscouraged Worker?A person who wants to
work, but who has given up searching for work. He or she believes there will be no job offers
![Page 30: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/30.jpg)
30
What is Underemployment?
People working at jobs below their level of skills
![Page 31: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/31.jpg)
31
What are criticisms of the Unemployment Rate?
• Does not include discouraged workers
• Includes part-time workers• Does not measure
underemployment
![Page 32: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/32.jpg)
32
20
15
10
5
1930 40 50 60
25
70 80 90 00
The U.S. Unemployment Rate
![Page 33: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/33.jpg)
33
4.3%4.5%
6.3%6.3%8.3%
11.7%12.4%
Japan U.S. Germany U.K. Canada ItalyFrance
![Page 34: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/34.jpg)
34
What are the types of Unemployment?
• Seasonal• Frictional• Structural• Cyclical
![Page 35: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/35.jpg)
35
What is Seasonal Unemployment?
Unemployment caused by recurring changes in hiring due to changes in weather conditions
![Page 36: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/36.jpg)
36
What is Frictional Unemployment?
Unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, entering, or re-entering the labor force
![Page 37: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/37.jpg)
37
What is Structural Unemployment?
Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities
![Page 38: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/38.jpg)
38
What is Cyclical Unemployment?
Unemployment caused by the lack of jobs during a recession
![Page 39: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/39.jpg)
39
What isFull Employment?
The situation in which an economy operates at an unemployment rate equal to the sum of the seasonal, frictional, and structural unemployment rates
![Page 40: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/40.jpg)
40
What percent unemployment is considered
Full Employment?The natural rate of
unemployment changes over time, but today it is considered to be about 5%
![Page 41: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/41.jpg)
41
What is the GDP Gap?The GDP gap is the
difference between full-employment real GDP and actual real GDP
![Page 42: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/42.jpg)
42
What is the Cost of Unemployment?
The GDP gap
![Page 43: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/43.jpg)
43
Demographic GroupsCivilian Unemployment Rates 1998
OverallMaleFemaleWhiteBlackTeenagers (16 - 19 years)White malesBlack malesWhite femalesBlack femalesLess than high schoolHigh school graduatesCollege graduates
4.5%4.4%4.6%3.9%8.9%14.6%14.1%30.1%10.9%25.3%7.1%4.0%1.8%
![Page 44: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/44.jpg)
44
Key Concepts
![Page 45: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/45.jpg)
45
Key Concepts• What is a Business Cycle?
• What are the phases of a Business Cycle?
• How long before a downturn is a Recession?
• What are the types of Economic Indicators?
• What causes Unemployment?
• Who is considered Unemployed?
• Who is considered Employed?
• What is the Unemployment Rate?
![Page 46: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/46.jpg)
46
Key Concepts cont.• What is the Civilian Labor Force?
• Who is a Discouraged Worker?
• What is Underemployment?
• What are the types of Unemployment?
• What is Full Employment?
• What percent unemployment is considered Full Employment?
• What is the Cost of Unemployment?
![Page 47: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/47.jpg)
47
Summary
![Page 48: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/48.jpg)
48
Business cycles are recurrent rises and falls in real GDP over a period of years. Business cycles vary greatly in duration and intensity. A cycle consists of four phases: peak, recession, trough and recovery.
![Page 49: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/49.jpg)
49
The generally accepted theory today is that changes in the forces of demand and supply cause business cycles.
![Page 50: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/50.jpg)
50
A recession is officially defined as at least two consecutive quarters of real GDP decline. A trough is the turning point in national output between recession and recovery. During a recovery, there is an upturn in the business cycle during which real GDP rises.
![Page 51: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/51.jpg)
51
Hypothetical Business Cycle
Peak
Peak
Trough
Recession Recovery
Growth
trend line
Real GDPper year
![Page 52: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/52.jpg)
52
Economic growth is measured by the annual percentage change I real GDP in a nation. The long-term annual average growth rate in the United States is 3 percent.
![Page 53: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/53.jpg)
53
Leading, coincident, and lagging indicators are economic variables that change before, at the same time as, and after changes in real GDP, respectively.
![Page 54: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/54.jpg)
54
The unemployment rate is the ratio of the number of unemployed to the number in the labor force multiplied by 100. The nation’s labor force consists of people who are employed plus those who are out of work, but seeking employment.
![Page 55: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/55.jpg)
55
Discouraged workers are a reason critics say the unemployment rate is understated. Discouraged workers are persons who want to work , but who have given up. Another criticism of the unemployment rate is that it overstates unemployment because respondents can falsely report they are seeking a job.
![Page 56: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/56.jpg)
56
Seasonal unemployment is unemployment due to seasonal changes.
![Page 57: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/57.jpg)
57
Frictional unemployment results when workers are seeking new jobs that exist. The problem is that imperfect information prevents matching the applicants with available jobs.
![Page 58: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/58.jpg)
58
Structural unemployment is unemployment caused by factors in the economy, including lack of skills, changes in product demand, and technological change.
![Page 59: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/59.jpg)
59
Cyclical unemployment is unemployment resulting from insufficient aggregate demand.
![Page 60: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/60.jpg)
60
Full employment occurs when the unemployment rate is equal to the total of the seasonal, frictional, and structural unemployment rates. Currently, the full-employment rate of unemployment in the United States is considered to be close to 5 percent. At this rate of unemployment, the economy is producing at its maximum potential.
![Page 61: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/61.jpg)
61
The GDP gap is the difference between full employment, or potential real GDP, and actual real GDP. Therefore, the GDP gap measures the loss of output due to cyclical unemployment.
![Page 62: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/62.jpg)
62
Chapter 16 Quiz
©2000 South-Western College Publishing
![Page 63: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/63.jpg)
63
1. The phases of a business cycle are a. upswing and downswing.b. full employment and unemployment.c. peak, recession, trough, and recovery.d. full employment, depression, expansion,
and plateau.
C. These are the four phases of changes in real GDP which mirrors changes in employment and other key measures of the macro economy.
![Page 64: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/64.jpg)
64
2. The phase of a business cycle during which real GDP reaches its minimum level is the a. recession.b. depression.c. recovery.d. trough.
D. Recession is the phase during which real GDP fall and recovery is the phase during which real GDP rises. Depression is an historical reference to the deep and long recession of the early 1930’s.
![Page 65: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/65.jpg)
65
3. Which of the following is not a variable in the index of leading indicators?a. New consumer goods orders.b. Delayed deliveries.c. New businesses formed.d. Prime rate.
D. The prime rate is a lagging indicator.
![Page 66: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/66.jpg)
66
4. Which of the following is a coincident indicator? a. Personal income.b. Industrial production.c. Manufacturing and trade sales.d. All of the above.
D. All of these will change at the same time that real GDP changes.
![Page 67: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/67.jpg)
67
5. The labor force consists of all persons a. 21 years of age and older.b. 21 years of age and older who are working.c. 16 years of age and older.d. 16 years of age and older who are working
or actively seeking work.
D. The labor force also includes the armed forces, but excludes the category called “persons not in labor force.”
![Page 68: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/68.jpg)
68
6. People who are not working will be counted as employed if they are a. on vacation.b. absent from their job because of bad
weather.c. absent from their job because of a labor
dispute. d. all of the above.
D. A person who works at least 1 hour per week for pay or at least 15 hours per week as an unpaid worker in a family business is counted as employed regardless of the special situations listed in a, b, and c.
![Page 69: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/69.jpg)
69
7. The number of people officially unemployed is not the same as the number of people who can’t find a job because a. people who have jobs continue to look for
better ones.b. the armed forces are included.c. discouraged workers are not counted.d. of all of the above.
C. A person can quit looking for a job because he is discouraged after trying to find one, but wants to work if he could find a job, yet this person is not considered unemployed because he is not actively seeking employment.
![Page 70: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/70.jpg)
70
8. Frictional unemployment applies to a. workers with skills not required for existing
jobs.b. short periods of unemployment needed to
match jobs and job seekers.c. people who spend long periods of time out of
work.d. unemployment related to the ups and downs
of the business cycle.
B. Frictional unemployment includes people changing jobs, initially entering the labor force, or re-entering the labor force.
![Page 71: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/71.jpg)
71
9. Structural unemployment is caused by a. shifts in the economy that make certain job
skills obsolete.b. temporary layoffs in industries such as
construction.c. the impact of the business cycle on job
opportunities.d. short-term changes in the economy.
A. Structural unemployment is long-term unemployment because the skills of unemployed workers do not match the skills required for existing jobs.
![Page 72: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/72.jpg)
72
10. Unemployment that is due to a recession is a. involuntary unemployment.b. frictional unemployment.c. structural unemployment.d. cyclical unemployment.
D. Only cyclical unemployment is attributable directly to the business cycle.
![Page 73: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/73.jpg)
73
11. Seasonal, frictional and structural unemployment is equal to a. frictional unemployment.b. structural unemployment.c. cyclical unemployment.d. full employment.
D. Full employment does not mean zero unemployment. Even in the best times, there is always seasonal, frictional, and structural unemployment.
![Page 74: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/74.jpg)
74
12. Which of the following statements is true?a. The four phases of the business cycle, in
order, are peak, recovery, trough, and recession.
b. When unemployment is rising, then real GDP is rising.
c. The economic problem typically associated with a recovery is rising unemployment.
d. Full employment exists in an economy when the unemployment rate equals the sum of seasonal, frictional, and structural unemployment rates.
D. There will always be some people looking for work.
![Page 75: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/75.jpg)
75
13. Which of the following groups typically has the highest unemployment rate?a. White men and women.b. African-American men and women as a
group.c. Teenagers.d. Persons who completed high school.
B. In 1998 the unemployment rate of black males was 30.1% and black males was 25.3%.
![Page 76: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/76.jpg)
76
Demographic GroupsCivilian Unemployment Rates 1998
OverallMaleFemaleWhiteBlackTeenagers (16 - 19 years)White malesBlack malesWhite femalesBlack femalesLess than high schoolHigh school graduatesCollege graduates
4.5%4.4%4.6%3.9%8.9%14.6%14.1%30.1%10.9%25.3%7.1%4.0%1.8%
![Page 77: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/77.jpg)
77
14. Which of the following is true?a. The GDP gap is the difference between full
employment real GDP and actual real GDP.b. We desire economic growth because it
increases the nation’s real GDP.c. Economic growth is measured by the annual
percentage increase in a nation’s real GDP.d. Discouraged workers are a reason critics say
the unemployment rate is understated.e. All of the above are true.
E. All of the above are true.
![Page 78: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/78.jpg)
78
Internet ExercisesClick on the picture of the book,
choose updates by chapter for the latest internet exercises
![Page 79: 02 business cycles and unemployment](https://reader033.vdocument.in/reader033/viewer/2022061114/5461da2cb1af9f92238b4b3e/html5/thumbnails/79.jpg)
79
END