Answer the following questions true (T) or false (F)
1. The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.
2. A period of economic expansion ends with a business cycle trough.
3. The U.S. economy experienced a period of relative stability from 1950-2007.
1. TRUE
2. FALSE
3. TRUE
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Suppose the economy has a high level of unemployment. This would imply
A) that the economy is operating on the SRAS curve and that government spending could be decreased to reduce unemployment. B) that the government should engage in expansionary fiscal policy and increase the tax rate. C) that fiscal policy has been ineffective and should be abandoned. D) that the economy is operating to the left of the LRAS curve and that government spending could be increased to reduce unemployment.
In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply. If the price of pecans increases
A) the curve will shift rightward. B) the curve will shift leftward. C) there is a movement along the curve. D) the curve will be unaffected.
Which of the following is an example of a progressive tax?
a. The excise tax on cigarettes. b. The federal tax on gasoline. c. The federal personal income tax. d. All of these.
Which of the following would cause the long-run aggregate supply curve to shift to the left?
A. an increase in wages B. a decrease in aggregate demand C. a decrease in taxes on profits D. a decrease in labor productivity