Define the following characteristics of business cycles: recurrence and persistence
What will be an ideal response?
Business cycles exhibit recurrence and persistence:
(1 ) Recurrence means that each complete cycle is followed by another complete cycle.
(2 ) Persistence means that, once begun, each contraction tends to continue. Likewise, once begun, each expansion tends to continue. For example, the 1981-1982 contraction lasted for 16 months, and the 1982-1990 expansion lasted for 93 months. These are persistent events.
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A great deal of damage is done to the environment in the urban U.S. because
A) a system based on private property cannot provide for a common environment. B) few people understand the economics of pollution. C) many and perhaps most people assign little or no value to a pleasant environment. D) the environment is treated as everyone's property and therefore as no one's property. E) the United States has no central planning.
Other things equal, if the Fed increases the discount rate,
A) the monetary base will decrease and the money supply will remain constant. B) the monetary base and the money supply will both decrease. C) the money supply will decrease and the monetary base will remain constant. D) the monetary base will decrease and the money supply may increase or remain constant.
If the consumption of sugar does not change at all following a price increase from 50 cents per pound to 65 cents per pound, the demand for sugar is considered to be
A) relatively inelastic. B) perfectly elastic. C) perfectly inelastic. D) unitary elastic.
Takeover bids (and the potential for such bids)
a. increase the incentive of corporate managers to perform efficiently. b. increase the likelihood that managers will be able to gain at the expense of stockholders. c. are more likely to occur when a company is producing efficiently and operating profitably. d. serve no useful economic purpose.