Chapter 8 - Business Cycles

Question 1

What is comovement? How is comovement related to the business cycle facts presented in this chapter?

Answer 1

b

Question 2

What terms are used to describe the way a variable moves when economic activity is rising or falling? What terms are used to describe the timing of cyclical changes in economic variables?

Answer 2

b

Question 3

If you knew that the economy was falling into a recession, what would you expect to happen to production during the next few quarters? To investment? To average labor productivity? To the real wage? To the unemployment rate?

Answer 3

b

Question 4

How is the fact that some economic variables are known to lead the cycle used in macroeconomic forecasting?

Answer 4

b

Question 5

What are the two components of a theory of business cycles?

Answer 5

b

Question 6

How do Keynesians and classicals differ in their beliefs about how long it takes the economy to reach long-run equilibrium? What implications do these differences in beliefs have for Keynesian and clas- sical views about the usefulness of antirecessionary policies? About the types of shocks that cause most recessions?

Answer 6

b