During the period from 1970 to the present, the U.S. economy experienced a Great Inflation, a Great Moderation, and a Great Recession. How does this sequence illustrate the concept of a "business cycle"?
What will be an ideal response?
The sequence runs from bad economic conditions to much better conditions to bad again. The Great Moderation is, in part, the recovery from the preceding bad, and, perhaps, the result of deliberate responses intended to end and to prevent excessive inflation. An economy "strengthened" by its successful struggle against inflation is, perhaps, particularly vulnerable to the opposite problem of recession. And, perhaps, "moderation" inspires a complacency and/or excessive confidence that leads to recession. In any case, the Great Recession is, in part, confirmation that all good things (like all bad things) must come to an end.
You might also like to view...
If the supply of hotel rooms falls and all other relevant factors remain unchanged, then,
a. the demand for hotel rooms will fall. b. the quantity demanded of hotel rooms will fall. c. the demand for hotel rooms will rise. d. the quantity demanded of hotel rooms will rise.
Explain how deposit insurance contributed indirectly to the savings and loan crisis of the 1980s
What will be an ideal response?
The sum of consumption (C), investment (I), government spending (G), and net exports (X-M) is called:
a. autonomous spending. b. aggregate expenditures. c. Keynesian income d. wealth.
If the price of airline tickets falls, what will happen to the demand curve for flight attendants?
a. It will shift to the right. b. It will shift to the left. c. The direction of the shift is ambiguous. d. It will remain unchanged.