Question

Which of the following statements is correct? A. A recession is a long-run alternation between economic upturns and downturns. B. A recession leads to higher employment and income. C. A depression occurs when the economic downturn becomes extremely deep and prolonged. D. An economic expansion is a decrease in the level of economic activity, and of the goods and services available. QUESTION 53 Which of the following statements is not correct? A. Currency in circulation is the largest part of M1. B. M1 is the most basic measure of money supply. C. $5,000 in your savings account and $100 in your checking account are included in M2. D.$95 on your campus meal card is part of M1 and M2. QUESTION 54 Which of the following statements is not correct? A. Potential output is the level of output that the economy would produce if it is in full employment. B. Potential output varies with the overall level of prices in the economy. C. The long-run aggregate supply curve is always vertical. D. The long-run aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible.

Answer 1

1) Answer is C.

when economic activity goes down recession starts but when economic activity goes more down this is called depression.

2) Answer is C.

Statement C is incorrect because both are the part of M1 supply of money.

3) Answer is B.

Potential output is what the economy could produce in long run while using all the resources at full employment. So it does not vary with the price level. Potential output curve is vertical on X-axis.

#Please rate positively...thank you