Ch.6 Business Cycles

Question 1

Microeconomics

Answer 1

decisions made by firms and individuals

Question 2

Macroeconomics

Answer 2

overall behavior of economy

Question 3

Paradox of Thrift

Answer 3

families and businesses worried about hard times so they cut their spending which harms everyone

Question 4

Self-Regulating Economy

Answer 4

economic problems can be corrected by invisible hand no govt interference

Question 5

Keynesian Economy

Answer 5

the depressed economy is the result of inadequate spending where govt intervention is needed

Question 6

Monetary Policy

Answer 6

changes in quantity of money to alter interest rates

Question 7

Fiscal Policy

Answer 7

changes in govt. spending and taxes

Question 8

Recessions (contraction, trough)

Answer 8

economic downturn when output and employement are failing

Question 9

Expansions (recovery, peak)

Answer 9

economic upturn when output and employment is rising

Question 10

Business Cycles

Answer 10

alternation b/w recessions and expansions
Peak to Trough

Question 11

Business Cycle are represented as

Answer 11

GDP
GDP=C+I+G+X-IM