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Chapter 9 test bank with Verified Answers Graded A+

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Chapter 9

Institution
Chapter 9

Chapter 9 test bank with Verified Answers Graded A+ 1. B 2. C 3. C 4. B *Recurring upswings and downswings* in an economy's real *GDP* over time are called A. recessions. B. business cycles. C. output yo-yos. D. total product oscillations. In the United States, *business cycles* have occ...

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Institution Chapter 9
Course Chapter 9

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Chapter 9 test bank with Verified Answers Graded A+
1. B *Recurring upswings and downswings* in an economy's
real *GDP* over time are called

A. recessions.
B. business cycles.
C. output yo-yos.
D. total product oscillations.

2. C In the United States, *business cycles* have occurred
against a *backdrop of a long-run trend* of

A. declining unemployment.
B. stagnant productivity growth.
C. rising real GDP.
D. rising inflation.

3. C *Most economists* agree that the *immediate determi-
nant of the volume of output and employment* is the

A. *composition* of consumer spending.
B. *ratio* of public goods to private goods production.
C. *level* of total spending.
D. *size* of the labor force.

4. B As it relates to *economic growth, the term long-run trend*
refers to

A. *the long-run increase* in the relative importance of
durable goods in the U.S. economy.

B. *the long-term expansion* or contraction of business
activity that occurs over 50 or 100 years.

C. *fluctuations in business* activity that average *40*
months in duration.

D. *fluctuations in business* activity that occur around
*Christmas, Easter,* and other major holidays.

, Chapter 9 test bank with Verified Answers Graded A+
5. B In which of the following *industries or sectors* of the
economy will business cycle *fluctuations* likely have the
*greatest effect on output?*

A. military goods
B. capital goods
C. textile products
D. agricultural commodities

6. D The industries or sectors of the economy in which busi-
ness cycle fluctuations tend to affect output most are

A. military goods and capital goods.
B. services and nondurable consumer goods.
C. clothing and education.
D. capital goods and durable consumer goods.

7. D During a severe recession, we would expect output to fall
the most in

A. the health care industry.
B. the clothing industry.
C. agriculture.
D. the construction industry.

8. C The phase of the business cycle in which real GDP *de-
clines* is called

A. the peak.
B. an expansion.
C. a recession.
D. the trough.

9. C The phase of the business cycle in which real GDP is at
a *minimum* is called

A. the peak.
B. a recession.
C. the trough.
D. the underside.

, 10. B The production of durable goods varies more than the
production of nondurable goods because

A. durable purchases of durables *are not* postponable.
B. durable purchases of durables *are* postponable.
C. the producers of nondurables have monopoly power.
D. producers of durables are highly competitive.

11. D A recession is defined as a period in which

A. cost-push inflation is present.
B. nominal domestic output falls.
C. demand-pull inflation is present.
D. real domestic output falls.

12. A In which *phase* of the business cycle will the economy
most likely experience *rising real output and falling un-
employment rates?*

A. expansion
B. recession
C. peak
D. trough

13. D Which of the following statements is true about *causes
of business cycle fluctuations?*

A. Economists all agree that supply shocks are the cause
of most business cycle fluctuations.

B. Economists all agree that productivity shocks are the
cause of most business cycle changes.

C. Economists all agree that monetary changes are pri-
marily responsible for business cycle fluctuations.

D. There are a wide range of theories as to the underlying
causes of business cycle movements.

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