Lagging variables are aggregate economic variables that
A. reach a peak two or more years after aggregate economic activity reaches a peak.
B. reach a peak after leading variables but before coincident variables reach a peak.
C. reach a peak after coincident variables reach a peak.
D. are insensitive to business cycles.
Answer: C
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In an open economy with a given level of real interest rates and risk, a decrease in real interest rates abroad will ________ capital inflows and ________ the equilibrium domestic real interest rate.
A. increase; decrease B. decrease; increase C. decrease; decrease D. increase; increase
Involuntary exchanges, such as robbery,
a. represent potential Pareto improvements b. are positive externalities c. are not Pareto improvements d. are antitrust violations e. may be Pareto improvements
Unemployment insurance is often criticized because workers can extend the amount of time they are unemployed and thus increase the cost of the program. This phenomenon is best described as
a. rent-seeking behavior. b. moral hazard. c. free riding.
When the price level falls
a. people want to hold more money. b. the interest rate rises. c. investment spending rises. d. All of the above are correct.