Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 7.4, Problem 3ST
To determine
Explain the business cycle and real
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According to the classical perspective (the one from the 19th century that I described at the beginning of my first lecture video), what kinds of things could cause recessions or other economic downturns?
what might explain the differences seen in the role of consumption and investment during the recession and recovery phases of the business cycle?
what about the period before the recession?
When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? During an economic boom, what happens to these variables?
Chapter 7 Solutions
Economics (MindTap Course List)
Ch. 7.1 - Prob. 1STCh. 7.1 - Prob. 2STCh. 7.2 - Prob. 1STCh. 7.2 - Prob. 2STCh. 7.2 - Prob. 3STCh. 7.4 - Prob. 1STCh. 7.4 - Prob. 2STCh. 7.4 - Prob. 3STCh. 7 - Prob. 1QPCh. 7 - Prob. 2QP
Ch. 7 - Prob. 3QPCh. 7 - Prob. 4QPCh. 7 - Prob. 5QPCh. 7 - Prob. 6QPCh. 7 - Prob. 7QPCh. 7 - Prob. 8QPCh. 7 - Prob. 9QPCh. 7 - Prob. 10QPCh. 7 - Prob. 11QPCh. 7 - Prob. 12QPCh. 7 - Prob. 13QPCh. 7 - Prob. 14QPCh. 7 - Prob. 1WNGCh. 7 - Prob. 2WNGCh. 7 - Prob. 3WNGCh. 7 - Prob. 4WNGCh. 7 - Prob. 5WNGCh. 7 - Prob. 6WNGCh. 7 - Prob. 7WNGCh. 7 - Prob. 8WNGCh. 7 - Prob. 9WNGCh. 7 - Prob. 10WNGCh. 7 - Prob. 11WNG
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- What 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_forwardNelson and Plosser (1982) found that much of the recession following the oil shock of 1973-1975 was permanent. What are some reasons (at least two) that a recession may result in a permanently altered growth path in an economy?arrow_forwardSuppose you are an advisor to the Business Cycle Dating Committee. You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year. Which data do you look at? How does the economy behave at the onset of a recession? Explain how unemployment changes over the business cycle. Why do these changes occur?arrow_forward
- Is there a personal responsibility to intervene and assist in a recession? Should Christians step up rather than the government?arrow_forwardPlot 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?arrow_forwardWhat is most likely to occur during the expansionary phase of the business cycle? A.) Real GDP increases and unemployment decreases B.) Inflation increases and unemployment increases C.) Real GDP decreases and inflations increases D.) Real GDP decreases and unemployment decreasesarrow_forward
- Who is John Maynard Keynes? What time period did he write? What did he believe about the market’s ability to recover from a recession?arrow_forwardWhich of the following economic environments would most likely be associated with a recession? Unemployment falling to 30-year low Unemployment increasing from 5% to 9% during the year New businesses opening in record numbers while new housing starts reach a 10-year high GDP growing at an annual rate of 4.2%arrow_forwardif inventories are increasing, what part of the business cycle could we be entering? Group of answer choices Depression Peak Recession Expansionarrow_forward
- Why do economists seek to abstract from the business cycle to focus on long-term secular trends in output?arrow_forwardHow do you correlate your answers in the previous questions with the phases of economic cycles and their short- and long-term effects? Explain your answer.arrow_forwardAre the four phases of the business cycle in a certain order?arrow_forward
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