Answer the following questions:
a. What is meant by the term "business cycle"?
b. What economic indicators would indicate where the economy is in the business cycle? Explain.
c. Give the four phases of the business cycle in their order of occurrence.
d. What criterion must be met for our economy to be officially in a recession?
a. The business cycle is the periodic increases and decreases of economic aggregates such as real GDP.
b. Unemployment rises during recessions and falls during booms, and real GDP falls during recessions and rises during booms.
c. expansion, boom, contraction, recession
d. two consecutive quarters of negative growth in real GDP
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Canada produces MP3 players and lumber, and the marginal costs for the two products are $200 per 1,000 board-feet of lumber and $100 per MP3 player
China also produces these goods, and the marginal costs are $300 per 1,000 board-feet of lumber and $100 per MP3 player. Which country has the comparative advantage in lumber production? A) Canada B) China C) Both countries share the comparative advantage. D) We need more information to answer this question.
If a firm increases its output and its average cost decreases, the firm is experiencing which of the following?
A) increasing marginal returns B) diseconomies of scale C) economies of scale D) random luck E) decreasing cost of marginal returns
Budget lines are drawn on a diagram with the
A) price of the good on the vertical axis and its quantity on the horizontal axis. B) price of one good on the vertical axis and the price of another good on the horizontal axis. C) quantity of the good on the vertical axis and its price on the horizontal axis. D) quantity of one good on the vertical axis and the quantity of another good on the horizontal axis.
How much do you believe that current tax policy is influenced by politics, as opposed to sound and efficient tax policy?
What will be an ideal response?