Question

4 pts Question 20 The National Bureau of Economic Research (NBER) is the organization that determines the official start and end dates of a recession. This week, the NBER announced that the US has officially entered a recession starting after February 2020, ending the longest expansion on record that started in June 2009 (the previous longest expansion from 1991 to 2001 was 8 months shorter). right before the Great Recession According to the NBER, December 2007 was the business cycle [Select) Financial Crisis started. This implies that the [Select) • lasted for 17 months. June 2009 marks the official business cycle Select] 4, after which the expansion that just ended began. The recent NBER announcement official names February 2020 the business cycl [ Select] Peak Trough Contraction Expansion

Answer 1

Ans. (1)

According to NBER, December 2007 was the business cycle Peak right before the Great Recession

/Financial Crisis started. This implies that the recession lasted for 17 months.   

June 2009 marks the official business cycle Trough after which the expansion that just ended began.

The recent NBER announcement official names February 2020 business cycle Peak.

Ans. (2)

o “A 2% increase in the output gap, is associated with a 1% increase in cyclical employment” – Incorrect Answer (Say's Law of Markets claims that the supply creates its own demand.)

o “Demand creates its own supply” – Incorrect (Say's Law of Markets claims that the supply creates its own demand.)

o None of these. – Incorrect (Say's Law of Markets claims that the supply creates its own demand.)

o “Supply creates its own demand”– Correct (Say's Law of Markets claims that the supply creates its own demand.)

Ans. (3)

o True – Correct Answer (Because the written itself correct, hence no explanation required.

o False – Incorrect (Because the written itself correct, hence no explanation required.

Ans. (4)

o Government Consumption and Investment – Correct (Because Keynes argues that economies do not stabilize themselves very quickly as it requires government active intervention.)

o Private Investment – Incorrect (Because its not according to Keynesian theory.)

o None of these. – Incorrect (Because its not according to Keynesian theory.)

o Consumption, due to high taxes – Incorrect (Because its not according to Keynesian theory.)

o Private Saving – Incorrect (Because its not according to Keynesian theory.)