According to Real Business Cycle Theory, which of the following events could lead to a downturn in GDP? OA sudden decrease in the money supply. O A negative technological shock. O The collapse of a market bubble. O Uncertainty about business investment.
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- How is long-term growth illustrated in an AD/AS model?QUESTION 21 A E В Time In the accompanying diagram, which phase of the business cycle would be most closely associated with an economic contraction? O a.B Ob.A O.D Od.C Level of Business ActivityWhich of the following is not a phase or turning point of the business cycle? O A. recession B. shutdown OC. trough OD. expansion
- The lowest part of a recession is referred to as its. O a. Peak O b. Depression O. Boom Od. TroughVariations of actual real GDP around potential real GDP are called economic fluctuations. What is another name for these fluctuations? Select one: O a. Economic growth O b. Trade surpluses O c. Income variations O d. Business cycles Check1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…
- Congratulationst You have been appointed an economic policy adviser to the United States, You are told that the economy is significantly abowe futtemplyoment GDP. Based on this inlormation, how can the economy would adjust to reach LR.SR Equilbrium (Classical View)? The economy wilt experience low unemployment rate, pushing wages up, and increasing the pelces of a key input (labor). shatting the sAS to the left (up). The economy will experience high unemployment rate, pushing wages down, and reducing the prices of a key input (labor). shiting the SAS to the right (down). The econoriny wil experience low unemployment rate, decreasing inceme, which will eventually shift the AD to the left. The eooncmy will experience low unemployment rate, pushing wages up, and increasing the prices of a key input (labor), shiting the sAs to the night (down).The formula for aggregate expenditure is Select one: O O O a. AE = C+/+ G + NX. b. AE = C+/+G+ NX-depreciation. C. AE=C+I+ G- NX. Macroeconomic indicators can be categorized as "leading" or "lagging". WhicAssume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.
- What is the contractionary phase of the business cycle characterized by? O reduced output and increased unemployment increased output and increased unemployment reduced output and reduced unemployment increased output and reduced unemploymentEconomists use the neoclassical growth model to explain fluctuations in the business cycle because can; the model shows how economic growth changes when the factors of production (capital, labour force and technology) change. O cannot; the model does not take into account technology changes. O cannot; the model only explains what determines the long term trends in output or output per labour. O can; as a long-run model, it captures business cycles over very long periods of time. O cannot; the model is more focused on government activity than private sector activity. O OThe economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate price levels? Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. O Potentially the price levels have decreased to a lower aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have fired some employees as labor has become too expensive.
