swer Trve OR Fds During the business cycles, consumption fluctuates component of
ID: 1154524 • Letter: S
Question
swer Trve OR Fds During the business cycles, consumption fluctuates component of the GDP 3. the most because it is the largest 4. According to classical macroeconomic theory, changes in the money supply change 5. The Okun's law predicts that in the U.S., when the unemployment rate increases by 6. If the central bank increased the money supply in response to a decrease in short-run nominal but not real variables. one percent, the growth rate will decrease by one percent aggregate supply, unemployment would return towards its natural rate, but prices would rise even more. 7. The Fed has chosen to use this interest rate as a target for monetary policy because 8. An increase in the money supply shifts the long-run AS curve to the right. 9. Increased optimism about the future leads to rising prices and falling unemployment 10. The value of net exports equals the value of they can directly control the interest rates in the economy. in the short run. a. national saving b. public saving. c. national saving - domestic investment. d. national saving - net capital outflow. ?. Historical evidence for the U.S. economy indicates that recessions have occurred roughly once every six years since the 1960s. a. b. the unemployment rate usually decreases during a recession and increases shortly after the recession ends. real GDP usually remains roughly constant during a recession and decreas shortly after the recession ends. changes in real GDP over the business cycle are largely attributable to ch in investment over the business cycle c. d. Which of the following is correct? a. Short run fluctuations in economic activity happen only in developing b. During economic contractions most firms experience rising sales. c. Recessions come at regular intervals and are easy to predict d. When real GDP falls, the rate of unemployment rises 12.Explanation / Answer
(3) True
In US for example, consumption demand comprises 65% to 68% of total GDP, leading consumption to experience maximum fluctuation.
(4) True
This is known as the Neutrality of money (or Classical Dichotomy).
(5) False
As per Okun's law, every 1% increase (decrease) in unemployment is associated with 2% decrease (increase) in GDP (and 3% decrease (increase) in GNP).
(6) True
A fall in short run aggregate supply leads to higher price level and lower output. A rise in money supply increases aggregate demand, shifting AD curve rightward so that in intersects the short run aggregate supply curve at original output level but at a still higher price level.
NOTE: As per Chegg Answering Policy, first 4 questions are answered.
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