The period in the business cycle from a ________ to a ________ is called a recession.
A. peak; trough
B. peak; new peak
C. trough; new trough
D. trough; peak
Answer: A
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The recognition time lag recognizes that it takes time
A) to collect information about the state of the economy. B) for any change in policy to take effect and for people to recognize that the policies are effective. C) to get politicians to agree on the best policy to enact. D) for the politicians to enact the policy once the need for change has been recognized.
Some kids wait until the school year begins to buy their back-to-school clothes so that they are sure to fit in. Such follow-the-leader behavior is an example of what the text calls:
A. efficient rationality. B. rules of thumb. C. focal point equilibrium. D. bounded rationality.
Predatory pricing
A. is usually quite effective at driving smaller firms out of a market. B. is illegal under antitrust laws. C. is often an inexpensive way for a large firm to drive smaller firms out of a market. D. is a form of price leadership.
Expected profit and the real interest rate affect investment decisions
Indicate whether the statement is true or false