Question

11. The business cycle is a. a very deep and prolonged economic downturn (recession or depression). b. the short-run economic fluctuations between expansions (inflationary gaps) and contracts (recessionary gaps). c. a period in which output and employment are rising d. a period in which output and employment are falling 2. If the price level and nominal GDP both doubled, then real GDP would a. increase by half. b. also double. C. remain unchanged. d. decrease by half. 3. The chain-weight method of computing annual real GDP a. is a method used to convert annual real to nominal GDP b. is a method for calculating annual real GDP using an early base year and a late base year (using consecutive years as the base year). c. gives exactly the same annual real GDP values as the deflation method of computing annual real GDP d. results in the calculation of substantially different growth rates in annual real GDP when the base year is changed 4. A country's current real GDP per capita a. is complete irrelevant to the country's standard of living. b. equals the country's current real GDP divided by its current population. c. equals the country's current real GDP multiplied by the country's current Consumer Price Index. d. measures the country's current-dollar value of all final goods and services produced within the country's borders during the time period. 5. Dissatisfaction with public school education has led many parents to try home schooling for their children. If many parents quit their jobs outside the home in order to spend time teaching their children at home, how will this affect potential real GDP? a. Potential real GDP will increase b. Potential real GDP will decrease. C. None of the above. d. There would be no effect on potential real GDP.

Answer 1

Due to presence of HOMEWORKLIB POLICY, I am answering 3 questions.

1. b

Explanation: Business cycles are the rise and fall in production output of goods and services in an economy. The stages in the business cycle include expansion, peak, recession or contraction, depression, trough, and recovery.

2. c

Explanation: Real GDP = Nominal GDP / Price level = 2 x Nominal GDP / 2 x Price level = Nominal GDP / Price level

4. b

Explanation: Real GDP per capita = Real GDP / Population