Economics 201: Supply, Demand, GDP, Business Cycles, and the Great Depression

Fill-in-the-blank practice flashcards covering market equilibrium, shifts in supply and demand curves, GDP metrics, business cycle phases, historical U.S. recessions, and causes of the Great Depression.

Market equilibrium occurs at the single price where the quantity demanded of units is __________ the quantity supplied of units.

equal to

In the market for Uber rides shown below, a price of $\$13.75$ leads to a quantity supplied of $1{,}150$ and a quantity demanded of $900$, creating a __________.

surplus

In the market for Uber rides shown below, a price of $\$12.75$ results in a quantity supplied of $910$ and a quantity demanded of $1{,}380$, creating a __________.

shortage

As illustrated in Figure 14, a decrease in demand shifts the demand curve from $D_1$ to $D_2$, leading to a movement along the supply curve to a lower equilibrium price and a __________ equilibrium quantity.

lower

As illustrated in Figure 15, a decrease in supply shifts the supply curve from $S_1$ to $S_2$, leading to a movement along the demand curve to a __________ equilibrium price and a lower equilibrium quantity.

higher

Given a fixed demand curve in a market, a rightward shift in supply lowers the equilibrium price and __________ quantity supplied.

increases

Given a fixed supply curve in a market, a rightward shift in demand __________ the equilibrium price and the equilibrium quantity.

increases

Gross Domestic Product (GDP) is defined as the total market value of all final goods and services produced in the U.S. in __________.

one year

Real GDP (RGDP) measures production from a given year stated in prices from a __________.

base year

Inflation is defined as an increase in the general level of prices or an increase in the __________.

price level

The government agency that calculates GDP and announces data every quarter of the year is the __________.

Bureau of Economic Analysis (BEA)

In the business cycle, the point where the economy turns from expansion to recession is defined as the __________.

peak

In the business cycle, the point where the economy turns from recession to expansion is defined as the __________.

trough

The traditional or old definition of a recession was at least __________ consecutive quarters of declining real GDP.

$$2$$

Business cycles are calculated and have their peaks and troughs 'time stamped' by the __________, which is not part of the federal government.

National Bureau of Economic Research (NBER)

The Gulf War Recession lasted for $8$ months from July 1990 to March 1991, with a peak-to-trough decline in RGDP of __________.

$$1.4\%$$

The Dotcom recession lasted from March 2001 to November 2001 with a peak-to-trough RGDP decline of __________.

$$0.3\%$$

The Great Recession lasted for $18$ months from December 2007 to June 2009, during which RGDP declined by __________.

$$4.3\%$$

The COVID recession began in __________ and ended in April 2020, resulting in a $3.5\%$ decline in RGDP across the entire year.

February 2020

Prior to the Great Depression, economists described the economy as 'self-regulating' because they believed it would naturally correct itself and was inherently __________ in the long run.

stable

The Great Depression lasted $43$ months, beginning in August 1929 and reaching its trough in __________.

March 1933

From the peak to the trough of the Great Depression, RGDP fell by $27\%$, and the unemployment rate rose from $3\%$ to __________.

$$25\%$$

During the stock market crash of 1929, the Dow Jones average declined nearly $13\%$ on __________.

Black Monday

Between 1921 and 1929, the Federal Reserve oversaw a drastic $67\%$ increase in the __________, which led to declining interest rates and unchecked stock market speculation.

money supply

In 1929, the United States was on the __________, under which the dollar was redeemable in gold and pegged to its value.

gold standard

Market equilibrium occurs at the single price where the quantity demanded of units is __________ the quantity supplied of units.

equal to

In the market for Uber rides shown below, a price of $\$13.75$ leads to a quantity supplied of $1{,}150$ and a quantity demanded of $900$, creating a __________.

surplus

In the market for Uber rides shown below, a price of $\$12.75$ results in a quantity supplied of $910$ and a quantity demanded of $1{,}380$, creating a __________.

shortage

As illustrated in Figure 14, a decrease in demand shifts the demand curve from $D_1$ to $D_2$, leading to a movement along the supply curve to a lower equilibrium price and a __________ equilibrium quantity.

lower

As illustrated in Figure 15, a decrease in supply shifts the supply curve from $S_1$ to $S_2$, leading to a movement along the demand curve to a __________ equilibrium price and a lower equilibrium quantity.

higher

Given a fixed demand curve in a market, a rightward shift in supply lowers the equilibrium price and __________ quantity supplied.

increases

Given a fixed supply curve in a market, a rightward shift in demand __________ the equilibrium price and the equilibrium quantity.

increases

Gross Domestic Product (GDP) is defined as the total market value of all final goods and services produced in the U.S. in __________.

one year

Real GDP (RGDP) measures production from a given year stated in prices from a __________.

base year

Inflation is defined as an increase in the general level of prices or an increase in the __________.

price level

The government agency that calculates GDP and announces data every quarter of the year is the __________.

Bureau of Economic Analysis (BEA)

In the business cycle, the point where the economy turns from expansion to recession is defined as the __________.

peak

In the business cycle, the point where the economy turns from recession to expansion is defined as the __________.

trough

The traditional or old definition of a recession was at least __________ consecutive quarters of declining real GDP.

$$2$$

Business cycles are calculated and have their peaks and troughs 'time stamped' by the __________, which is not part of the federal government.

National Bureau of Economic Research (NBER)

The Gulf War Recession lasted for $8$ months from July 1990 to March 1991, with a peak-to-trough decline in RGDP of __________.

$$1.4\%$$

The Dotcom recession lasted from March 2001 to November 2001 with a peak-to-trough RGDP decline of __________.

$$0.3\%$$

The Great Recession lasted for $18$ months from December 2007 to June 2009, during which RGDP declined by __________.

$$4.3\%$$

The COVID recession began in __________ and ended in April 2020, resulting in a $3.5\%$ decline in RGDP across the entire year.

February 2020

Prior to the Great Depression, economists described the economy as 'self-regulating' because they believed it would naturally correct itself and was inherently __________ in the long run.

stable

The Great Depression lasted $43$ months, beginning in August 1929 and reaching its trough in __________.

March 1933

From the peak to the trough of the Great Depression, RGDP fell by $27\%$, and the unemployment rate rose from $3\%$ to __________.

$$25\%$$

During the stock market crash of 1929, the Dow Jones average declined nearly $13\%$ on __________.

Black Monday

Between 1921 and 1929, the Federal Reserve oversaw a drastic $67\%$ increase in the __________, which led to declining interest rates and unchecked stock market speculation.

money supply

In 1929, the United States was on the __________, under which the dollar was redeemable in gold and pegged to its value.

gold standard

Passed to protect struggling farmers and domestic industries, the __________ raised tariffs on thousands of imported goods, but backfired when other countries placed retaliatory tariffs on U.S. exports.

Smoot-Hawley Tariff Act

List the 5 reasons for the Great Depression identified by History.com:

1. Vulnerabilities in the Global Economy

2. Financial Speculation

3. Blunders by the Fed

4. The Gold Standard

5. The Smoot-Hawley Tariffs

One cause of the Great Depression was vulnerabilities in the global economy resulting from __________, which eliminated much of the international cooperation required to run the international financial system.

World War I

In the lead-up to the 1929 crash, financial speculation expanded as Wall Street investors bought stocks on __________, putting down as little as $10\%$ and borrowing the rest using their shares as collateral.

margin

Following the stock market crash of 1929, the resulting negative wealth effect caused a severe drop in __________ as consumers and firms became deeply pessimistic.

consumption

As a consequence of the stock market crash and subsequent financial collapse, the nation's public companies had lost __________ of their value by 1932.

$$89\%$$

In 1929, after an expansionary policy contributed to a speculative bubble, the Federal Reserve abruptly halted speculation by __________ the money supply and raising interest rates.

contracting

Because the U.S. was on the gold standard in 1929, the Federal Reserve responded to investors trading dollars for gold by raising __________, making it difficult for businesses to borrow the money needed to survive.

interest rates