Which of the following does not describe a characteristic of short-term economic fluctuations?
A. Expansions and recessions are irregular in length and severity.
B. Expansions and recessions are felt in only a few sectors of the economy.
C. Durable-goods industries are more sensitive to short-term fluctuations than service and non-durable industries.
D. The unemployment rate rises during recessions.
Answer: B
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A leftward shift of the supply curve will lead to an
A) increase in equilibrium price. B) excess supply at the old equilibrium price. C) increase in quantity supplied. D) All of the above.
Janette buys a bond in the amount of $500 with a promised interest rate of 15 percent. If the market interest rate decreases to 5 percent, Janette can sell her bond for up to
A. $1,500. B. $500. C. $250. D. $1,250.
If the government wished to shift aggregate demand to the right, it might:
A. increase government spending. B. increase income taxes. C. pressure the Fed to decrease the money supply. D. Any of these things might cause aggregate demand to shift to the right.
The Keynesian approach, with its focus on aggregate demand and sticky prices, has proven useful in understanding how the economy fluctuates in the short run and why recessions and
a. natural unemployment occur. b. cyclical unemployment occur. c. structural unemployment occur. d. full unemployment occur.