Match the term with the definition expansion beyond previous peak expansion from trough to previous peak, marked by rising Real GDP economic downturn from peak to trough A.Recession B.Recovery C.Prosperity
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- Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes with diagramAn expansion ends when the economy O has grown for two quarters in a row. O hits a trough and then enters a recession. O begins to grow following a peak. hits a peak and then enters a recession.Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on:1. aggregate demand, 2. aggregate supply, 3. price level, and 4. real GDP. (a) An increase in government expenditure in infrastructureClick or tap here to enter text.(b) A severe recession occurs in a country, which has been a major importer of thenation’s exports.Click or tap here to enter text.(c) The federal government increases business taxesClick or tap here to enter text.(d) The Central Bank increases the cash interest rate
- Economists defined economic recession as more than 2 consecutive quarters in which there is a decline in real GDP a.) True b.) FalseState both definitions of a recession, the old/traditional definition and the new/modern definition. Then explain why the old definition was replacedDuring a recession: potential GDP declines potential GDP increases real GDP declines O real GDP increases
- 54. Which of the following would be described as the operational lag? a. The time required to know that there is a recession b. The time required to agree upon a policy remedy for a recession c. The time required to get a particular plan impiemented with the money getting into peoples' hands d. Both A and BWhat common rule of thumb do economists use to define a recession? A decline of 5% in GDP A decline of 10% in GDP One quarter of negative GDP growth Two quarters (six months)of negative GDP growthExplain business response towards recessionary pressures in the economy.
- Comment, on the likely outcome with sufficient arguments? a) Impact on GDP when, Interest rates have come down in the countryb) Impact on balance of payment, when there is a huge demand of vaccines produced in India in South Africa.c) Inflation rate in India reaches negative 2% (-2%)d) The aggregate demand falls short of aggregate supply in the economyA number of macroeconomic variables decline during recessions. One of these variables is the GDP. What other variables, besides real GDP, tend to decline during recessions? Given the definition of real GDP and its components, explain the declines in these economic variables which are to be expected. Empirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend in spite of the cycles?Economic growth would be represented inExhibit A-10 by a(an)a. leftward shift in the long-run aggregate supply curve (LRAS).b. inward shift of the production possibilities curve.c. rightward shift in the long-run aggregate supply curve (LRAS).d. movement along the long-run aggregate supply curve (LRAS).
