How does the unemployment rate fluctuate over the business cycle?
What will be an ideal response?
During a recession the unemployment rate is generally rising. During an expansion the unemployment rate is generally falling.
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In the long run, real output can be less than, equal to, or greater than the economy's potential output.
a. true b. false
Negotiations and binding contracts are not possible between rivals in
A. cooperative games. B. perfect competition C. single-firm monopolies. D. noncooperative games.
If the MPS is .25 and the economy has a recessionary expenditure gap of $5 billion, then equilibrium GDP is:
A. $5 billion below the full-employment GDP. B. $5 billion above the full-employment GDP. C. $20 billion below the full-employment GDP. D. $20 billion above the full-employment GDP.
Which of the following economic perspectives would be most opposed to a balanced-budget rule?
A. Monetarism B. Mainstream economics C. Rational expectations D. New classical economics