Exam 9: Business Cycles

New Keynesian economists believe that nominal wages and prices respond ________ to shocks,and classical economists believe that nominal wages and prices respond ________ to shocks.

Assume that for the third quarter of 2012,actual real GDP was $176.1 billion and potential real GDP was $163.9 billion.According to Okun's law,the cyclical unemployment rate during the third quarter of 2012 was

Inflation tends to ________ during a business cycle expansion and ________ during a business cycle recession.

Economists have found that firms are

Suppose consumer confidence declines and as a result,consumer spending decreases by $4 billion dollars.Other things equal,if households spend $0.75 of each extra dollar of income and save the remaining $0.25,by how much will spending decrease during the first round through the circular flow?

Suppose that the demand for labour decreases due to an economic downturn,and union workers are in the first year of a three-year labour contract.With respect to these union labourers,the economic downturn will most likely ________ the nominal wage and ________ the quantity of labour hired.

Since the 1950s,

From the Keynesian perspective,when during a recession the quantity supplied is greater than the quantity demanded in the market for some goods and services,there is

Explain why price and wage stickiness in the short run are reasons that macroeconomic shocks can result in fluctuations in total employment and total production.

Suppose consumer confidence improves and as a result,consumer spending increases by $50 billion dollars.Assume households spend $0.80 of each extra dollar of income and save the remaining $0.20.Other things equal,calculate by how much spending will increase during: a. the first round through the circular flow. b. the second round through the circular flow. c. the third round through the circular flow. d. the fourth round through the circular flow.

If households save $0.20 of each additional dollar of increased income and spend the rest,the expenditure multiplier will be

From 1886 to 1955,the price of a 6.5-ounce glass bottle of Coca Cola was priced at 5 cents.In the case of this size bottle of Coca Cola,the price could be considered

From the classical perspective,a decrease in output during a recession is a result of

Which of the following is an explanation as to why fluctuations in real GDP have become less volatile in Canada since 1950?

Research shows that prices tend to remain sticky for a longer period of time

If oil prices decrease,

If manufacturers' new orders received for consumer goods are starting to fall,real GDP is most likely

When economists address the concept of price and wage stickiness in relation to the business cycle,they are referring to

From the Keynesian perspective,an increase in cyclical unemployment during a recession represents

As the economy nears the end of a recession,which of the following would we most likely see?