What is meant by the term business cycle as described by economists?
What will be an ideal response?
The term business cycle refers to the recurrent ups and downs in the level of economic activity extending over several years. The long-term trend for the economy shows economic growth, but in the short-run there can be periodic increases and decreases in the level of economic activity around the upward trend.
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Refer to the above figures. An external cost exists. This will lead to a(n)
A) underproduction equal to Q1 minus Q2. B) overproduction equal to Q4 minus Q3. C) underproduction equal to Q4 minus Q3. D) overproduction equal to Q1 minus Q2.
Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors
a. True b. False Indicate whether the statement is true or false
When new firms enter a monopolistically competitive industry, the market
A. Demand curve shifts to the left. B. Supply curve shifts to the left. C. Supply curve shifts to the right. D. Demand curve shifts to the right.
During the most recent recession, many people temporarily lost substantial value in their retirement investment portfolios because most of the assets (including stocks, bonds, and real estate) all declined in value at the same time
In hindsight, what was the problem with these portfolios? A) The portfolios were not adequately diversified because the assets were negatively correlated, so all of the assets had negative returns at the same time. B) The portfolios were not adequately diversified because the assets were more positively correlated than expected, so all of the assets had negative returns at the same time. C) The portfolios were adequately diversified, but the assets should have been more positively correlated to protect against recession risk. D) The investors should not have diversified their investments to protect against recession risk.