Ch 6

Question 0

The term recession describes a situation where

Answer 0

Output and living standards decline

Question 1

The business cycle depicts

Answer 1

Short run fluctuations in output and employment

Question 2

Real GDP measures the

Answer 2

Value of final goods and services produced within the borders of a country, corrected for price changes

Question 3

Higher rates of unemployment are linked with

Answer 3

Higher crime rates as the unemployed seek to replace lost income

Question 4

Savings are generated whenever

Answer 4

Current income exceeds current spending

Question 5

Supply shocks

Answer 5

Occur when the sellers face unexpected changes in the availability and/or prices of key inputs

Question 6

Which of the following is an example of a supply shock

Answer 6

A dramatic increase in energy price increases production costs for firms in the economy

Question 7

Which of the following results from firms holding inventories?

Answer 7

First can maintain production levels and Adjust inventories in response to demand shocks

Question 8

Which of the following is an example of economic investment

Answer 8

Nike buys a new machine that increases shoe production

Question 9

The business cycle reflects both short-run fluctuations in output and long-run economic growth true or false

Answer 9

True

Question 10

Any person without a job is considered to be unemployed true or false

Answer 10

False

Question 11

Real GDP measures the change in the price level overtime true or false

Answer 11

False

Question 12

Economist referred to purchases of stocks and bonds as investment true or false

Answer 12

False

Question 13

At the end of the summer driving session, the demand for gasoline typically declines. This is an example of a negative demand shock true or false

Answer 13

False

Question 14

The sticky price model is the only one used by macroeconomist true or false

Answer 14

False