Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 7, Problem 11E
To determine
To write:
A brief paragraph on the economic reason behind change in each leading indicator, as shown in the Table 1, before real output changes.
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Plot these data points, and identify the four phases of the business cycle. Give a theory that may explain the cause of the observed business cycle. What are some of the consequences of a prolonged decline in real GDP? Is the decline in real GDP from $1,000 billion to $500 billion a recession?
Consider the following statements about the business cycle.
Which of the following statements is
incorrect
?
A.
A rise in economic activity from the cycle trough to the peak indicates that the economy is in an expansion.
B.
A fall in economic activity from the cycle peak to the trough indicate that the economy is in a recession.
C.
The business cycle is a regular fluctuation of real GDP around potential GDP that is predictable.
D.
The business cycle is a periodic cycle in real GDP and employment.
Economists use the phrase "business cycle" when referring to fluctuations in
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- Economists refer to fluctuations in output as the "business cycle" because movements in output are regular and predictable True/Falsearrow_forwardWhat is a business cycle? Explain the four elements of a business cycle and what happens to economic activities and conditions during each element. In your explanation, be sure to touch on the concept of a recession. Use a graph to show the different elements.arrow_forwardWhat is the relationship between the business cycle and economic growth, and how do government policies aim to manage economic fluctuations?A) The business cycle has no connection to economic growth, and government policies have no impact on fluctuations.B) The business cycle represents the periodic expansion and contraction of economic activity, and government policies, such as fiscal and monetary measures, aim to mitigate the negative effects of economic downturns and support long-term growth.C) The business cycle is solely influenced by consumer spending.D) Government policies only exacerbate economic fluctuations.arrow_forward
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