Answer the following statements true (T) or false (F)
1. The impact of a hurricane in Florida would be an example of a random fluctuation in business activity.
2. During a trough in the business cycle, the economy eventually reaches the bottleneck stage.
3. During a contraction in the business cycle, the multiplier effect leads to cumulative declines in output, employment, and income.
4. Stabilizing measures by the federal government eliminate the business cycle.
5. The U.S. economy has experienced no minor cycles since World War II.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
5. FALSE
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If investment in an economy falls, which of the following is likely to happen?
A) Labor demand will increase. B) The revenue of firms in the economy will fall. C) Asset prices will rise. D) The number of mortgage defaults will fall.
If the monthly unemployment rate increase mentioned in the Application wound up being a permanent and not temporary change, the best economic decision by the committee would most likely be to
A) decrease the money supply to stimulate the economy. B) not change monetary policy. C) decrease the money supply to slow the economy down. D) increase the money supply to stimulate the economy.
Most macroeconomic policy consists of:
A) monetary policy B) fiscal policy C) exchange-rate policy D) regulatory policy
Exhibit 4-6 Demand and supply curves
If the market demand and supply curves shift as given in Exhibit 4-6, the resulting new equilibrium will show a(n):
A. increase in market price and a decrease in the quantity exchanged. B. decrease in market price and a decrease in the quantity exchanged. C. increase in market price and an increase in the quantity exchanged. D. decrease in market price and an increase in the quantity exchanged.