Question 1

Which of the following would represent a factor capable of shifting the aggregate demand curve?

Accepted Answer

An increase in profit expectations for businesses would likely result in increased investment and spending, which would shift the aggregate demand curve to the right. Options A, B, and C are all supply-side factors that would affect the aggregate supply curve.

Question 2

Which of the following is not a component of aggregate demand?

Accepted Answer

Government transfer payments are not a component of aggregate demand as they do not directly contribute to the demand for goods and services. Transfer payments are payments made by the government to individuals or businesses for specific purposes, such as social security, unemployment benefits, or agricultural subsidies, but they do not result in direct spending on goods and services.

Question 3

Explain why the shape of the aggregate supply curve is important to the health of an economy.

Accepted Answer

The answer of Explain why the shape of the aggregate...

Question 4

GDP for two hypothetical countries, Alpha and Beta, are $500 billion and $750 billion, respectively.Alpha has a population of 750 million while Beta's population is 1.24 billion people.Which of the following statements is true?

Accepted Answer

The answer of GDP for two hypothetical countries, Alpha and...

Question 5

The expansion phase of a business cycle can be characterized by all of the following except

Accepted Answer

The expansion phase of a business cycle is generally characterized by increasing output, decreasing unemployment, and increasing employment. Therefore, decreasing output would not be a characteristic of this phase.

Question 6

A measurement of average standard of living across countries is

Accepted Answer

Gross Domestic Product per capita (GDP per capita) measures the total economic output of a country divided by the number of people living in that country. This gives a better indication of average standard of living across countries because it takes into account population size. Gross Domestic Product (GDP) and Gross National Product (GNP) do not account for population size, while Gross National Product per capita (GNP per capita) takes into account the income earned by a country's citizens both domestically and abroad, but does not consider the size of the population.

Question 7

Provide a circular flow diagram for households only, and describe the circular flow of income.

Accepted Answer

The answer of Provide a circular flow diagram for households...

Question 8

A business cycle is

Accepted Answer

A business cycle refers to recurring expansions and contractions in the level of aggregate economic activity, measured in terms of Gross Domestic Product (GDP) or Gross National Product (GNP). It includes fluctuations in the level of consumption, business investment, government spending, and net exports.

Question 9

The contraction phase of a business cycle can be characterized by all of the following except

Accepted Answer

The contraction phase of a business cycle is marked by decreasing output, increasing unemployment, and decreasing employment. Therefore, option B is incorrect as it suggests increasing output, which is not characteristic of the contraction phase.

Question 10

Periods of decreasing economic activity, falling production, and falling employment are

Accepted Answer

Business cycle contractions refer to periods of decreasing economic activity, falling production, and falling employment.

Question 11

Reference: Use the graph to answer questions 
-A business cycle contraction occurs

Accepted Answer

A business cycle contraction occurs between the peak (year 2) and the trough (year 3) of the business cycle. Therefore, the contraction occurs between years 2 and 3, making option C the correct answer.

Question 12

The aggregate demand curve is the relationship between

Accepted Answer

The aggregate demand curve represents the total quantity of all goods and services demanded by the economy at different price levels, and one of the main components of this demand is consumption, which varies inversely with the price level.

Question 13

Business cycles are officially tracked by

Accepted Answer

The National Bureau of Economic Research (NBER) is responsible for officially tracking business cycles in the United States. The NBER is a nonprofit research organization that analyzes economic data to determine the timing of economic recessions and expansions.

Question 14

Reference: Use the graph to answer questions 
-A business cycle expansion occurs

Accepted Answer

The business cycle expansion occurs between years 3 and 4 as there is an upward movement in the GDP curve during this period.

Question 15

Periods of increasing economic activity, rising production, and increasing employment are

Accepted Answer

Periods of increasing economic activity, rising production, and increasing employment are called Business cycle expansions.

Question 16

Aggregate demand is the demand

Accepted Answer

Aggregate demand refers to the total demand for goods and services in an economy, including demand from private consumers, businesses, and the government. Therefore, option D is the correct answer. Options A, B, and C are too narrow and do not fully encompass the concept of aggregate demand.

Quiz 6: Measuring Economic Activity