Exercise Topic 11 - Topic 11. Aggregate Demand and...

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Topic 11. 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. 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 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. 4. Recessions do not last forever because a. workers get tired of being unemployed. Topic 11 - 1 -
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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. 5. In the long run, the aggregate demand curve is a. horizontal. b. upward sloping. c. downward sloping. d. vertical. 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 07/15/2011 for the course ACCT 122 taught by Professor Barry during the Spring '11 term at Universitas Pelita Harapan.

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Exercise Topic 11 - Topic 11. Aggregate Demand and...

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