Which statement is correct?
A. During a recession spending on capital goods increases.
B. The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle.
C. Recessions have not been severe because economists and statisticians have been able to predict their occurrence and intensity with high accuracy.
D. Real output and employment usually show little variance over the business cycle.
Answer: B
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In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit rises, the amount of loanable funds demanded will be
A) less than $450 billion. B) $450 billion. C) between $300 billion and $450 billion. D) greater than $450 billion.
The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is
A) greater in the $8 to $10 range. B) greater in the $2 to $4 range. C) the same in both price ranges. D) greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.
When a government splits a natural monopoly vertically, it is breaking the company up:
A. along its stages of production. B. into smaller companies providing the same goods. C. in order to maximize its profits. D. in order to capture all efficiencies possible.
GDP is an indicator of a society’s standard of living, but it is only a rough indicator.
Select whether the statement is true or false. A. True B. False