How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact
What will be an ideal response?
Government programs like unemployment insurance and Social Security have helped to shorten recessions since they provide additional income to individuals who might not otherwise be able to continue consumption spending. Since the Great Depression the federal government has also become more actively committed to maintaining low unemployment, which may have reduced the severity of recessions and prolonged expansions.
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According to Okun's Law, for each 1 percentage point that the unemployment rate is above the natural unemployment rate, then
A) the inflation rate is greater than the expected inflation rate by 2 percentage points. B) real GDP is above potential GDP by 2 percent. C) real GDP is below potential GDP by 2 percent. D) the real interest rate is below the natural real interest rate by 1 percentage point. E) the inflation rate is less than the expected inflation rate by 1 percentage point.
When the social costs of producing or consuming a good exceed the private costs, _____
a. a positive externality exists b. an inefficiently high quantity of the good will be produced and consumed, from the society's point of view c. the direct consumers of the good will bear the external costs d. the individuals involved in the production of the good do not bear the private costs e. the quantity of the good produced will be less than the socially efficient level
Which of the following both shift aggregate demand right?
a. net exports rise for some reason other than a price change and government purchases rise. b. net exports rise for some reason other than a price change and taxes increase. c. net exports fall for some reason other than a price change and government purchases fall. d. net exports fall for some reason other than a price change and taxes fall.
If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
A. 2.5. B. 0.4. C. 0.0. D. 0.6.