ECONOMICS
BUSINESS CYCLES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
The interactions of households and firms in factor and product markets
|
|
|
Short-run economic growth and long-run fluctuations in GDP over time
|
|
|
Changes in a nation’s aggregate output in response to changes in the aggregate price level
|
|
|
Short-run fluctuations in GDP but a long-run increase in GDP over time
|
|
|
Fluctuations in unemployment and inflation over time
|
Detailed explanation-1: -Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as recessions.
Detailed explanation-2: -The business cycle reflects both short-run fluctuations in output and long-run economic growth. Economists and policymakers are generally more concerned about nominal GDP than real GDP. Nominal GDP measures a nation’s output in current year prices. Any person without a job is considered to be unemployed.
Detailed explanation-3: -These changes are caused by levels of employment, productivity, and the total demand for and supply of the nation’s goods and services. In the short-run, these changes lead to periods of expansion and recession.
Detailed explanation-4: -Long-run economic growth is represented by a rightward shift of the long-run aggregate supply curve. Short-run fluctuations are represented by shifts in the aggregate demand or short-run aggregate supply that causes movements of short-run equilibrium output-above or below potential output.