Question 1

What are the four phases of the business cycle?How long do business cycles last?How do seasonal variations and long-term trends complicate measurement of the business cycle?Why does the business cycle affect output and employment in capital goods and consumer durable goods industries more severely than in industries producing nondurables?

Question 2

What is the Consumer Price Index (CPI) and how is it determined each month?How does the Bureau of Labor Statistics (BLS) calculate the rate of inflation from one year to the next?What effect does inflation have on the purchasing power of a dollar?How does it explain differences between nominal and real interest rates?How does deflation differ from inflation?