Question 1

During a recession,real GDP falls.Which of the following also tends to fall?
A) Real consumption
B) Real investment
C) Employment
D) All of the above

Accepted Answer

During a recession, real GDP falls, which leads to a decrease in the demand for goods and services. As a result, real consumption and real investment tend to fall, leading to a decrease in employment as firms reduce their production and lay off workers. Therefore, all of the above (real consumption, real investment, and employment) tend to fall during a recession.

Question 2

Since the Great Depression,how long have U.S.recessions lasted,on average?
A) About 6 months
B) About 12 months
C) About 18 months
D) About 24 months

Accepted Answer

Since the Great Depression, U.S. recessions have lasted about 12 months on average. This duration is derived from historical economic data and reflects the average length of economic downturns in the United States over this period.

Question 3

Which of the following statements about U.S.recessions since the Great Depression is correct?
A) Recessions have occurred regularly, every 6 years.
B) Recessions have occurred irregularly, approximately every 6 years.
C) Recessions have occurred regularly, every 10 years.
D) Recessions have occurred irregularly, approximately every 10 years.

Accepted Answer

Recessions in the U.S. since the Great Depression have not followed a strict pattern but have occurred irregularly, with an average interval that might be roughly estimated at about every 6 years, though the actual intervals vary significantly.

Question 4

The major recession that occurred sometime between 2005 and 2015 occurred during which years?
A) 2006−2008
B) 2007−2009
C) 2008−2010
D) 2009−2011

Accepted Answer

The major recession, often referred to as the Great Recession, occurred from December 2007 to June 2009.

Question 5

Which of the following is true?
A) Investment growth tends to be high when GDP growth is low.
B) Investment growth tends to be high when consumption growth is high.
C) Consumption growth tends to be high when GDP growth is low.
D) Unemployment growth tends to be high when GDP growth is high.

Accepted Answer

Investment growth tends to be high when consumption growth is high because when consumers are confident in the economy and their financial situation, they tend to spend more, which increases demand for goods and services. This, in turn, encourages businesses to invest in production and expansion to meet the increased demand.

Question 6

Since the Great Depression,approximately how often have U.S.recessions occurred?
A) About once every 6 years
B) About once every 10 years
C) About once every 14 years
D) About once every 18 years

Accepted Answer

Historically, U.S. recessions have occurred on average about once every 6 years since the Great Depression.

Question 7

Which of the following is true of economic expansions?
A) Governments can correctly predict the duration of economic expansions.
B) Economic expansions are defined as the periods between recessions.
C) Output grows and unemployment is high during periods of economic expansion.
D) Consumption increases but investment falls during periods of economic expansion.

Accepted Answer

Economic expansions are defined as the periods between recessions, which are characterized by increasing output, decreasing unemployment, and rising prices. However, governments cannot accurately predict the duration of economic expansions, and consumption and investment both typically increase during these periods.

Question 8

Which of the following rises during a recession?
A) Consumption
B) Investment
C) GDP
D) Unemployment

Accepted Answer

During a recession, economic activity slows down, leading to a decrease in demand for goods and services. This results in companies laying off employees or reducing their hours, leading to an increase in unemployment. Therefore, the correct answer is D.

Question 9

During an expansion,real GDP rises.Which of the following also tends to rise?
A) Real consumption
B) Real investment
C) Employment
D) All of the above

Accepted Answer

During an economic expansion, all of the above tend to rise. When real GDP rises, firms produce more and therefore tend to hire more workers. With more income, consumers tend to increase their spending on consumption goods. And, with a positive outlook for the economy, firms tend to increase their investment spending.

Question 10

A short-run change in ________ is referred to as a business cycle.
A) the growth rate of real GDP
B) the aggregate price level
C) the currency exchange rate
D) the expenditure incurred by the government

Accepted Answer

A business cycle refers to the short-run fluctuations in the growth rate of real GDP. The other options listed are not directly related to business cycles.

Question 11

What are the three properties of economic fluctuations?

Accepted Answer

The answer of What are the three properties of economic...

Question 12

Which of the following is true of growth in developed and developing countries?
A) Growth is completely steady in both developed and developing countries.
B) Growth is completely steady in developed countries but fluctuates in developing countries.
C) Growth fluctuates in developed countries but is completely steady in developing countries.
D) Growth fluctuates in both developed and developing countries.

Accepted Answer

Growth fluctuates in both developed and developing countries. While developed countries may have more stable and predictable economic growth, they are still subject to fluctuations due to changes in global markets, natural disasters, and other factors. Developing countries may experience more dramatic fluctuations due to their dependence on external factors, such as fluctuating commodity prices or changes in international aid and investment.

Question 13

Which of the following is true?
A) Expansions have different durations.
B) Expansions are always shorter than recessions.
C) Recessions are always accompanied by high rates of inflation.
D) Economists can accurately predict the end of a recession.

Accepted Answer

Expansions do not have a fixed duration and can vary in length. It is dependent on various factors such as government policies and economic conditions.

Question 14

Another common term for a recession is a(n)________.
A) expansion
B) boom
C) peak
D) contraction

Accepted Answer

A contraction is a term used to describe a period of economic decline or slow growth, which is commonly known as a recession. The terms "expansion" and "boom" are used to describe a period of economic growth, while "peak" is the highest point of an economic cycle before a decline or contraction.

Question 15

How many major deviations from trend GDP has the United States experienced between 1929 and 2017?
A) one
B) two
C) three
D) four

Accepted Answer

The United States has experienced two major deviations from trend GDP between 1929 and 2017. The first was the Great Depression of the 1930s, and the second was the Great Recession of 2008-2009. Both of these events had significant impacts on the economy and resulted in several years of negative GDP growth. While there have been other periods of slower than average growth or brief recessions, they do not qualify as major deviations from the trend.

Question 16

Recovery after the recession of 2007-2009 was slow.When do economists generally believe U.S.real GDP returned to trend after this recession?
A) About 2010
B) About 2013
C) About 2016
D) It was still below trend by 2016

Accepted Answer

Economists generally believe that by 2016, the U.S. real GDP had not yet returned to its pre-recession trend, indicating a slow and prolonged recovery from the 2007-2009 recession.

Question 17

What can government policies do about the business cycle?
A) Government policies can completely negate the business cycle.
B) Government policies can eliminate expansions but not recessions.
C) Government policies can reduce the severity of the business cycle.
D) Government policies cannot affect the business cycle at all.

Accepted Answer

Government policies can affect the business cycle by using fiscal policy (changes in government spending and taxation) and monetary policy (changes in the money supply and interest rates) to reduce the severity of economic downturns and stimulate growth during a recession. However, it is unlikely that government policies can completely eliminate the business cycle, as it is a natural part of economic activity.

Question 18

In the United States,recessions are informally defined as ________ in real GDP.
A) two consecutive quarters of negative growth
B) three consecutive quarters of negative growth
C) two consecutive quarters of positive growth
D) three consecutive quarters of positive growth

Accepted Answer

Recessions are commonly defined as two consecutive quarters, or six months, of negative growth in real Gross Domestic Product (GDP). This means that the economy is producing less goods and services and experiencing a decline in economic activity. The National Bureau of Economic Research (NBER) is responsible for officially dating recessions and expansions in the United States.

Question 19

The Great Depression and World War II both caused major deviations from trend GDP.The Great Depression resulted in real GDP moving significantly ________ trend GDP; World War II resulted in real GDP moving significantly ________ trend GDP.
A) above; above
B) above; below
C) below; above
D) below; below

Accepted Answer

The Great Depression resulted in real GDP moving significantly below trend GDP, as the economy experienced a severe contraction. World War II resulted in real GDP moving significantly above trend GDP, as government spending on the war effort stimulated economic growth.

Question 20

Which of the following falls during an economic boom?
A) Unemployment
B) GDP
C) Consumption
D) Investment

Accepted Answer

During an economic boom, economic activity is high, leading to lower unemployment as businesses expand and hire more workers. GDP, consumption, and investment typically increase during a boom.

Quiz 12: Short-Run Fluctuations

During a recession,real GDP falls.Which of the following also tends to fall?

Since the Great Depression,how long have U.S.recessions lasted,on average?

Which of the following statements about U.S.recessions since the Great Depression is correct?

The major recession that occurred sometime between 2005 and 2015 occurred during which years?

Which of the following is true?

Since the Great Depression,approximately how often have U.S.recessions occurred?

Which of the following is true of economic expansions?

Which of the following rises during a recession?

During an expansion,real GDP rises.Which of the following also tends to rise?

A short-run change in ________ is referred to as a business cycle.

What are the three properties of economic fluctuations?

Which of the following is true of growth in developed and developing countries?

Which of the following is true?

Another common term for a recession is a(n) ________.

How many major deviations from trend GDP has the United States experienced between 1929 and 2017?

Recovery after the recession of 2007-2009 was slow.When do economists generally believe U.S.real GDP returned to trend after this recession?

What can government policies do about the business cycle?

In the United States,recessions are informally defined as ________ in real GDP.

The Great Depression and World War II both caused major deviations from trend GDP.The Great Depression resulted in real GDP moving significantly trend GDP; World War II resulted in real GDP moving significantly trend GDP.

Which of the following falls during an economic boom?