Which part of real GDP fluctuates most over the course of the business cycle?
a. consumption expenditures
b. government expenditures
c. investment expenditures
d. net exports
c
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
If you were the Chairman of the Fed and faced inflation, you would most likely
a. encourage commercial banks to provide loans by buying government securities b. encourage commercial banks to provide loans by raising the discount rate c. encourage commercial banks to provide loans by selling government securities d. restrict commercial bank lending by selling government securities e. restrict commercial bank lending by lowering the federal funds rate
Fiscal restraint is defined as
A. Tax cuts or spending hikes intended to reduce aggregate demand. B. Tax cuts or spending hikes intended to increase aggregate demand. C. Tax hikes or spending cuts intended to reduce aggregate demand. D. Tax hikes or spending cuts intended to increase aggregate demand.
Recent research by Keynesians and classicals has led to
A. convincing evidence that TFP shocks are the dominant force affecting the business cycle. B. the recognition by classical economists that prices adjust very slowly. C. the refutation of the efficiency wage model. D. a reconciliation of the types of models they use.