The defining features of business cycles is that they
A. are inherently bad
B. represent the underlying trend of real GDP
C. are fluctuations about trend of real GDP
D. measure prospects for future growth in the economy
Answer: C. are fluctuations about trend of real GDP
You might also like to view...
A long hot summer has increased the demand for beer; at the same time a tax is placed on alcohol. What can we say about the equilibrium price and quantity of alcohol?
A. Equilibrium price rises; equilibrium quantity rises. B. Equilibrium price falls; equilibrium quantity is unknown. C. Equilibrium price rises; equilibrium quantity is unknown. D. Equilibrium price rises; equilibrium quantity falls.
As technology allows information regarding the financial health of corporations to become easier to obtain, we should expect:
A. the risk spread to decrease. B. the role of bond rating agencies to become more important. C. the risk spread to increase. D. a decrease in the number of participants in the bond market.
The cross-price elasticity of demand measures:
A. the relationship between the demand for one good and the supply of another. B. the relationship between the demand for one good and the price of another. C. the relationship between the demand and supply of one good at the intersection of the curves. D. the elasticity of demand at the intersection of the supply and demand curves.
Suppose that in 2012 ABC Corp. produced 500 million units of a good at an average cost of $2, and in 2013 ABC Corp. expanded its plant capacity and produced 600 million units at an average cost of also $2. In this range, one can conclude that ABC Corp. is experiencing:
A. economies of scale. B. diseconomies of scale. C. neither economies of scale or diseconomies of scale. D. diminishing marginal product.