Briefly describe the difference between a so-called real business cycle and a more traditional “spending” business cycle.

What are some example possible reasons for a decline in the level of potential GDP?

Briefly explain whether you agree or disagree with the following statements. ( a) 'If nominal GDP is less than real GDP, then the price level must have fallen during the year. (b) 'Whether real GDP declines, nominal GDP must also decline' (c) 'If a recession is so severe that the price level declines, then we know that both real GDP and nominal GDP must decline'

1. How do consumption and investment spending affect aggregate expenditures and output over the business cycle?

The answer should be typed.

17 01:27:36 Use the following diagrams for the U.S. economy to answer the next question. AS₁ AS₂ 这 AD Real GDP (1) AS₂ AS, * AD (3) Real GDP (2) NY AD₂ AD₁ Real GDP AD₂ Real GDP AD₁ If the economy is initially at full employment, which of the diagrams best portrays a recession resulting from a decrease in government purchases?

2

Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.

If you read in the newspaper that the United States’ 2015 real GDP declined while nominal GDP for 2015 grew, how could you explain this?

In Macroeconomics, why does total income have to equal total output?