The Business Cycle Dating Committee defines a recession as

A) two consecutive quarters of declining real GDP.
B) two consecutive quarters of declining nominal GDP.
C) a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months.
D) a significant decline in inflation and unemployment lasting more than a few months.


Answer: C

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In the above figure, point B depicts

A) an inflationary gap with real GDP in excess of potential GDP. B) an inflationary gap with real GDP less than potential GDP. C) a recessionary gap with real GDP in excess of potential GDP. D) a recessionary gap with real GDP less than potential GDP.

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Goods having a negative calculated income elasticity are

a. superior goods b. producers' goods c. nondurable goods d. inferior goods e. none of the above

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Is it ever rational for unions to strike if they know that their members will never be able to make up for the wages they lose during the strike? Explain

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