Growing and shrinking of economy is best interpreted by business cycle. Knowledge about this growing and shrinking mechanism of economy is very important for economists and policy makers to plan economic stabilization policies accordingly. In the light of these statements, write a note on different phases of business cycle and make its graph to categorize each phase properly.?

Q: Since 1965, the U.S. economy has experienced how many economic contractions?

A: Since 1965, the U.S. economy has witnessed seven economic contractions so far.

Q: According to the real business cycle theory, productivity shocks are an important source of business…

A: Total factor productivity is the amount of total output produced by using the amount of inputs…

Q: Are TFP shocks a reasonable explanation for the business cycles

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: Over the past 150 years or so in the U.S., business cycle expansions have tended to be relative to…

A: Examining the historical patterns of business cycles in the United States is essential for…

Q: In real business cycle theory, which of the following is the driving force of macroeconomic…

A: Real business-cycle theory (RBC theory) is a class of new classical macroeconomics models in which…

Q: Keynesian Sticky Wage Model The economy experiencing a decrease of 3% in aggregate expenditure, due…

A: According to the sticky wage theory, employee remuneration responds slowly to changes in firm…

Q: s Cycle Theory explain the business cycle, and why do they object to government intervention to…

A: The theory in which fluctuations in the business cycle to a larger extent could be accounted for by…

Q: Consider the following two alternative definitions of a recession: 1.A period of negative output…

A: A negative output growth would result into decrease in economic activity to a greater extent.

Q: During the recession of 2008, Did the US Government take a page of the Keynesian Macro theory to…

A: Keynesian macro theory primarily identifies the role of government or government intervention in…

Q: According to the Keynesian framework, ____________ in _______________ may cause inflation, but not a…

A: Inflation usually means rise in prices and and recession is such a period where less demand are seen…

Q: Just true or false: There is general agreement among Macroeconomists about how the macro economy…

A: The above statement is false. Explanation: This is because in macroeconomics, there are different…

Q: In the context of Real Business Cycle theory explain the role played by the intertemporal…

A: Changes or fluctuation in economic activity as stated by the Real Business Cycle theory is majorly…

Q: Analyzing Macroeconomic Events with the IS-MP Diagram. Consider the following events in the…

A: A tax credit is a dollar system that taxpayers can deduct from their tax liability. Tax credits,…

Q: Assume a technological advance lead to lower production costs. Show the effect this will have on…

A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…

Q: he graph below shows the AD-AS diagram for Spain.

A: Cyclical unemployment: It refers to the ups and downs in the overall employment due to the change in…

Q: As the Federal Reserve sharply raises rates in the face if substantial inflationary pressures,…

A: Inflationary pressure is the continuous increase in the general price level in an economy. During…

Q: According to the "World View" below, World View: Comparative Macro Performance The performance of…

A: Misery index is considered as the seasonal adjustment of unemployment rate and the inflation rate.…

Q: Part 1:Changes in which factors could cause aggregate demand to shift from AD to AD1? What could…

A: The Keynesian AD-AS model represents the relationship between aggregate demand and aggregate supply…

Q: Households tend to increase their spending during a recession because they realize that more…

A: Recession:- Recession can be defined as a period of economic contraction during which economic trade…

Q: Which of the following is not seen by economists as an underlying cause of business cycle…

A: The business cycle, also known as the economic cycle, refers to the fluctuations of economic…

Q: According to the Austrian theory of the business cycle, the following is false A. A cluster of…

A:

Q: Consider the 1997 Asian Financial Crisis and its impact on the wealth of households and businesses…

A: 1997 Asian Financial crisis hits mostly south east Asia and east Asia in starting of July. It…

Q: What the basic arguments stated by the Real-Business-Cycle (RBC) Theory, regarding economic…

A: Economic growth is the increment in the production level of products and services in a specific…

Q: SRAS

A: Short run aggregate supply (SRAS) depicts the relationship among the price and real output. It is…

Q: Which of the following is not one of the possible general sources of shocks that can cause business…

A: A Business Cycle is defined as a cycle of fluctuations in the Gross Domestic Product (GDP) along its…

Q: Consider the following statements about the business cycle.   Which of the following statements is…

A: Business cycles are the alternate periods of expansion and decline in an economy's commercial…

Q: Assume a technological advance lead to lower production costs. Show the effect this will have on…

A: Assuming a classical model, a technological advancement allows the economy to increase its…

Q: when hoarding occurs, what problem does it create for an economy?   You can use the recent run on…

A: Hording is the act of accumulating and stockpiling goods in excess of what is necessary or…

Q: Adjust the following graph to show the effect of a credit crunch on real output and the price level.…

A: The credit crunch is a situation when the economy fails to provide any lending support to the…

Q: In early​ 2017, policymakers at the Federal Reserve forecast that real GDP during 2017 would…

A: It is given that the growth rate for real GDP between 2016 and 2017 is 0.32 percentage points higher…

Q: Graphical Analysis 1. Using the AE-PC Model illustrate graphically the impact of each these factors…

A: At point D, where the AD and AS curves connect, the Keynesian cross diagram is initially in…

Q: 1- ) The National Bureau of Economic Research maintains a Web page devoted to business cycle…

A: The rhythmic undulation of economic growth and contraction, commonly referred to as the business…

Q: Discuss money supply and inappropriate government policies as a cause of economic fluctuations

A: The increases in national income are economic fluctuations and are caused by many fluctuations. The…

Q: Suppose you are interested in isolating the cyclical component of a macroeconomic time series (such…

A: The time series viewpoint—cycles being dictated by different arbitrary shocks which are proliferated…

Q: Why do economists seek to abstract from the business cycle to focus on long-term secular trends in…

A: The business cycle is the phenomenon of ups and downs in an economy. The business cycle has periods…

Q: Compare Hicks theory of business cycle and Keynesian theory of business cycle.

A: The business cycle is the irregular and nonrepeating up and-down movement of business activity. The…

Q: Evidence indicates that a recession occurs at about the same time as a decrease in investment.…

A: The real business cycle theory is one of the approaches to understand the business cycle in an…

Q: What actions might a business owner take during times of economic contraction? In other words, how…

A: Business cycles represent those periods of cyclical fluctuations that occur in an economy in terms…

Q: What are the key ideas of the real business cycle model? How does it explain business cycle…

A: The real business cycle theory makes the fundamental assumption that an economy witnesses all these…

Q: potential output

A: Real GDP stands for Real Gross Domestic Product. It is a measure of the overall monetary output of a…

Q: Empirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How…

A: Introduction In the long run, real GDP in the United States is rising, but short-term volatility is…

Q: Aggregate demand and supply curves have been widely used to analyze the performance of the…

A: Fiscal policy refers to the use of government spending, taxation, and borrowing to influence the…

Q: How does the classical business cycle analysis change the IS-LM model to make it different from a…

A: There are different schools of economic thought. Each school differs from the other in terms of…