In a typical business cycle, what stage immediately follows a peak?
(A) Contraction
(B) Expansion
(C) Growth
(D) Trough
Ans: (A) Contraction
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Cartels usually succumb to divisive forces caused by: a. stringent enforcement of a cartel agreement
b. the similarity of production costs across member firms. c. members cheating by giving secret discounts. d. insufficient profits compared to independent operations.
In the aggregate demand-aggregate supply model, an increase in the price level will
a. increase money demand, raise the interest rate, reduce aggregate expenditure, and decrease equilibrium real GDP b. decrease money demand, lower the interest rate, increase aggregate expenditure, and increase real GDP c. increase the money supply, lower the interest rate, increase aggregate expenditure, and increase real GDP d. decrease the money supply, raise the interest rate, reduce aggregate expenditure, and decrease real GDP e. not change money supply, money demand or the interest rate, but will shift the aggregate demand curve to the right
The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:
A. Federal Deposit Insurance Corporation (FDIC). B. Federal Bond Sale Authority. C. Council of Economic Advisers. D. Federal Open Market Committee (FOMC).
If Volkswagen (a German-based firm) produces a car in Tennessee and exports it to Mexico, in which country’s GDP will the car be counted?
A. Germany’s, because Volkswagen is a German company B. Mexico, because that is where the car is purchased C. The United States, because that’s where it was built D. Both Mexico and the United States