When the economy fluctuates around its long-run aggregate supply:
A. it is called the business cycle.
B. the economy is in a state of chaos.
C. the value of currency becomes unstable.
D. we must be in a recession.
A. it is called the business cycle.
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Refer to the figure above. The labor market is currently at point E. Which of the following is likely to happen if a recession hits the economy assuming that wages are flexible?
A) The labor market equilibrium will move from E to H. B) The labor market equilibrium will move from E to D. C) The labor market equilibrium will move from E to F. D) The labor market equilibrium will move from E to G.
An indifference curve is a line showing
a. combinations of goods that can be produced if all resources are fully employed. b. all combinations of two commodities that are equally desirable to the consumer. c. all combinations of goods over which the consumer has no choice. d. how decisions are made in a nonmarket economy.
The different effects of fiscal and monetary policy in an open economy with mobile capital hinges on their different effect on
A. price levels. B. interest rates. C. the money supply. D. real GDP.