What phase of the business cycle is the economy currently in? Explain your reasoning and explain how you will know when the economy enters each of the three subsequent phases.
What will be an ideal response?
Answers to this question will vary but should exhibit an understanding of the
characteristics of each of the phases of the business cycle. For example, students might
state that the economy is in expansion because real gross domestic product (RGDP)
has grown consistently over the past few quarters. They will know when the economy
hits its peak when RGDP is stagnant. When RGDP begins to decline, they will know the
economy is contracting, and when it stops declining, it will have hit its trough.
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Suppose a bank has $2 million in excess reserves and total reserves of $10 million. A required reserve ratio of 10% is applicable to all deposits at the bank. What is the total amount of deposits at the bank?
a. $100 million b. $8 million c. $800 million d. $80 million e. $10 million
Refer to Figure 3. For Ben, the opportunity cost of 1 pound of ice cream is
a. 1/14 pound of cones.
b. 1/2 pound of cones.
c. 2 pounds of cones.
d. 4 pound of cones.
Discuss new classical economics and real business cycle theory
What will be an ideal response?
If a country's GDP increases and all other variables remains constant, ________
A) its income per worker will increase B) its income per capita will fall C) its GNP will fall D) its trade surplus will increase