On a graph of real gross domestic product over time, recessions appear as
A. relatively short and shallow drops on an otherwise increasing path.
B. the dips on a path that increases and decreases equally.
C. the periods where the rate of grow, while still positive, slows.
D. long, sharp declines on an otherwise increasing path.
Answer: A
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The law of diminishing marginal benefit explains why
A. addicts can never get enough. B. people will only consume their favorite goods and not try new things. C. demand curves slope downward. D. supply curves slope upward.
Which of the following would be most likely to improve the standard of living of a less-developed country?
What will be an ideal response?
The U.S. imposes substantial taxes on cigarettes but not on loose tobacco. When the tax on cigarettes went into effect, the demand for home cigarette rolling machines most likely:
A. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise. B. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall. C. decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall. D. decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.
Figure 14.1 shows three aggregate demand curves. A shift from curve AD2 to curve AD1 could be caused by a(n):
A. increase in the money supply. B. increase in taxes. C. increase in the price level. D. increase in government spending.