Use the NBER data in Table 8.1 in the textbook on U.S. business cycle turning points to calculate:
a) the shortest business cycle from peak to peak; b) the shortest business cycle from trough to trough; c) the longest business cycle from peak to peak; and d) the longest business cycle from trough to trough.
(a) The shortest business cycle from peak to peak is 17 months, which extended from August 1918 to December 1919. This includes 7 months of contraction followed by 10 months of expansion.
(b) The shortest business cycle from trough to trough is 28 months, which extended from July 1980 to October 1982. This includes 12 months of expansion followed by 16 months of contraction.
(c) The longest business cycle from peak to peak is 128 months, which extended from July 1990 to March 2001. This includes 8 months of contraction followed by 120 months of expansion.
(d) The longest business cycle from trough to trough is 128 months, which extended from March 1991 to November 2001. This includes 120 months of expansion followed by 8 months of contraction.
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If there is a deficit in the financial accounts, ________.
A. the sum of the capital account and the current account must be less than zero B. the sum of the reserve account and capital account must be zero C. the sum of the current account and the reserve account must be greater than zero D. the sum of the current account, reserve account, and capital account must be zero
The multiplier principle is important because it
a. was central to economic theory before Keynes. b. implies that investment will help stabilize the economy. c. shows why small shifts in investment have a powerful influence on national income. d. illustrates why a small change in income causes a large change in saving.
What is “crowding out”? Why is it important in discussions of fiscal policy? Use an appropriate diagram to illustrate your answer.
What will be an ideal response?
If real GDP in 2016 using 2015 prices is equal to the nominal GDP of 2016, then
A. real GDP in 2016 is larger than real GDP in 2015. B. prices in 2016 are lower than prices in the base year. C. the price level has not changed. D. prices in 2016 are higher than prices in the base year.