CHAPTER 33 - Chapter33 AggregateDemandandAggregateSupply 1....

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Chapter 33 Aggregate Demand and Aggregate Supply 1. A severe and  prolonged  recessionary  phase of a business cycle is sometimes described  as a. an inverted  peak. b. a trough. c. a recession. d. a depression. ANSWER: d a depression. SECTION: 1 OBJECTIVE: 1 2. If you and  your friends are still looking for a job eighteen  months after graduation, even after  lowering  your wage expectations, you are probably in the business cycle phase of a  a. recession. b. peak. c. boom. d. recovery ANSWER: a recession. SECTION: 1 OBJECTIVE: 1 3. Ethel maintains that she can predict when  the economy  is going to move up  or down  a business  cycle. In fact a. most economists can predict the business cycle. b. the business cycle is quite regular, with a new  phase beginning  every 24 months. c. business cycles are irregular and  unpredictable in the short run. d. only the Federal Reserve can predict moves in the business cycle. ANSWER: c business cycles are irregular and  unpredictable in the short run. SECTION: 1 OBJECTIVE: 1 4. Recessions do not last forever because a. workers get tired of being unemployed. b. firms eventually have incentives to increase employment  and  produce more output. c. government  steps in and  boosts spending  back to long-run levels. d. the Federal Reserve has perfect control over the money supply. ANSWER: b firms eventually have incentives to increase employment  and  produce more output. SECTION: 1 OBJECTIVE: 1 5. In the long run, the aggregate demand  curve is a. horizontal. b. upward  sloping. c. downward  sloping. d. vertical. ANSWER: d vertical. SECTION: 2 OBJECTIVE: 2 195
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196    Chapter 33/Aggregate Demand and Aggregate Supply 6. When studying  the short run, the assumption  of money neutrality is a. not relevant. b. increasingly important. c. still relevant  but the classical dichotomy  no longer holds. d. Both b and  c are correct.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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CHAPTER 33 - Chapter33 AggregateDemandandAggregateSupply 1....

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