Question

match the scenario to the correct phase of the business cycle

1. delta airlines has asked all of their employees to take a 7% cut in pay due to the decrease in ticket sales.
2. ford has experienced an increase in sales of both mid - size and full - size cars. as a result, they have called back to work 500 of the 1200 employees that were laid off last year.
3. the taylor family is trying to plan a family vacation for the summer, but they are having a hard time finding a place that is available. disneyworld is booked for the month of june and the cruise ships are booked for both june and july.

match the term to the correct definition:

1. gdp adjusted for inflation
2. gdp measured in current prices
3. inflation that occurs when demand for goods and services exceeds existing supply
4. inflation that occurs when producers raise prices to meet increased costs
5. level of employment where 5% of the labor force is unemployed
6. percentage of the labor force out of work and actively seeking a job

match the term to the correct definition:

1. unemployment that results from changes in the business cycle
2. unemployment that occurs when a workers skills do not match their job
3. unemployment that occurs when people are entering the job market for the first time or moving from one job to a better job
4. unemployment that occurs when business slows for a season.

match the scenario to the correct type of unemployment

1. with the economy in recovery, laura has hopes of finding a new job.
2. lina just graduated from college and is looking for a job in her field.
3. max has an appointment with a career counselor now that the factory has eliminated his job as a welder.
4. jacob must find a new job because his job no longer needs him due to summer ending.

how could growth expand the production possibility cycle?
please draw the new ppc on the graph to the left.
where would a period of high unemployment be located on the ppc?

Explanation:

1. Delta Airlines cutting pay due to decreased ticket - sales indicates a downturn in the business cycle, which is a recession phase.
2. Ford calling back laid - off employees due to increased sales shows an expansion phase of the business cycle.
3. Difficulty in finding vacation spots indicates high demand, which could be part of an expansion phase.
4. GDP adjusted for inflation is Real GDP.
5. GDP measured in current prices is Nominal GDP.
6. Inflation when demand exceeds supply is Demand - Pull Inflation.
7. Inflation when producers raise prices due to increased costs is Cost - Push Inflation.
8. 5% unemployment level is considered a level close to full employment.
9. Percentage of the labor force out of work and seeking a job is the Unemployment Rate.
10. Unemployment from business cycle changes is Cyclical Unemployment.
11. Unemployment when skills don't match jobs is Structural Unemployment.
12. Unemployment when entering the job market or changing jobs is Frictional Unemployment.
13. Unemployment when business slows seasonally is Seasonal Unemployment.
14. In an economic recovery, Laura's hope of finding a job is related to Cyclical Unemployment decreasing.
15. Lina just graduating and looking for a job is Frictional Unemployment.
16. Max losing his job as a welder due to factory changes is Structural Unemployment.
17. Jacob losing his job as summer ends is Seasonal Unemployment.

For the PPC questions: Growth can expand the production possibility curve by increasing resources (e.g., more labor, capital), improving technology, or better resource allocation. A period of high unemployment means resources are under - utilized, so it would be located inside the PPC.

Answer:

1. Recession
2. Expansion
3. Expansion
4. C. Real GDP
5. D. Nominal GDP
6. E. Demand - Pull Inflation
7. F. Cost - Push Inflation
8. A. Full Employment
9. B. Unemployment Rate
10. B. Cyclical Unemployment
11. A. Structural Unemployment
12. C. Frictional Unemployment
13. D. Seasonal Unemployment
14. Cyclical Unemployment
15. Frictional Unemployment
16. Structural Unemployment
17. Seasonal Unemployment

Growth expands PPC by increasing resources/tech/allocation. High unemployment is inside the PPC.