Exam 23: The Nature and Causes of Economic Fluctuations

Exhibit 23-6 -According to Exhibit 23-6, line abd shows the path of potential GDP. In Year 2, suppose the expenditure line intersects the 45-degree line at the level of spending corresponding to point b. If, in Year 3, the economy is at point c, then

Which of the following statements is true?

Changes in the factors that underlie potential GDP growth

The 45-degree line identifies

Describe what happens to the aggregate expenditure line in each of the following cases:

To compare economic fluctuations in different countries, one should look at

When Tom's income is $20,000, he spends $18,000 and when his income increases to $30,000, he spends $23,000. His MPC is

Which of the following measures the change of real GDP in the short run as a result of an increase in government purchases?

To simplify the analysis, the textbook assumes that

According to the consumption function, as income increases, consumption

Which of the following statements is true?

When the unemployment rate is equal to the natural unemployment rate, capacity utilization is usually close to

In normal times, when the economy is in neither a recession nor a boom, manufacturing capacity utilization is at 100 percent.

The study of economic fluctuations is

The consumption relationship in this chapter assumes that interest and wealth do not affect consumption

Economic fluctuations have been common only since the beginning of the twentieth century.

In a boom year,

Which of the following statements is false?

Manufacturing capacity utilization in normal times typically equals

The spending multiplier is the ratio of the change in real GDP to