Economics Lectures 6-12 Test

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Economics Lectures 6-12 Test
2014-03-18 20:53:27
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  1. What three ways do households spend their income? What percent of each?
    • 84% - personal consumption¬†
    • Durable goods: 12%
    • Nondurable goods: 30%
    • Services: 58%
    • Personal taxes - 16%
    • >1% - Savings
  2. How many households are in the US?
    105 million
  3. How much do households receive as wages salaries?
    70% or $36.4 billion
  4. How much of their income do the poorest 20% get? Top 20%?
    • Poorest: 4%
    • Richest: 50%
  5. What three parts is a business divided into?
    plants, firms, and industries
  6. What are the three legal forms of businesses?
    Sole proprietorship, partnerships, and corporations
  7. What are four types of business ventures?
    • Government-owned business
    • Not for Profit
    • Franchise
    • Cooperative
  8. What are the four phases of the business cycle?
    Peak, recession, trough, and expansion
  9. When does contraction occur?
    Due to consumer spending and producer supply
  10. What is expansion?
    GDP slowly increases as demand for goods slowly rises due to low interest rates
  11. What is the trough?
    At the end of a recession, economy is at its lowest point
  12. What is recession?
    • Two quarters (6 months) of declining GDP
    • Lasts 6-18 months
  13. How does the government operate on each phase of the business cycle?
    • Peak: Federal Reserve increase interest rates to slow spending
    • Recession: Government intervenes to help those without money/jobs
    • Trough: Tax restructuring, work programs, (i.e. Obama's stimulus package)
    • Expansion: Increases production and spending
  14. Describe the Great Depression?
    Worst trough in US history; 13 million unemployed (25%); 4000 banks close
  15. What is the history of the business cycle?
    Appeared during the late 19th century; Adam Smith believed that the interaction of market forces would lead to stability