MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 11, Problem 12SQ
To determine
The implication of the
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The lowest part of a recession is referred to as its _________.
a.
Depression
b.
Boom
c.
Trough
d.
Peak
What are the important mechanisms that reverse the effects of a recession in a modern economy? (Check all that apply.)
A. Labor supply increases due to an increase in real wages.
B. The multipliers on wages and employment return to normal.
C. Labor demand increases due to expansionary government policies.
D. Labor demand increases due to market forces.
What market forces might cause the labor demand curve to shift back to the right? (Check all that apply.)
A. Technological advances encourage firms to expand their activities.
B. The banking system recuperates and businesses are again able to use credit to finance their activities.
C. Excess inventory has been sold off.
D. Wage rigidity decreases.
The housing market has weakened during every recession except which of the following?
a. The Recession of 1974
b. The Recession of 1991
c. The Recession of 2001
d. The Recession of 2008
Chapter 11 Solutions
MACROECONOMICS FOR TODAY
Ch. 11.3 - Prob. 1YTECh. 11 - Prob. 1SQPCh. 11 - Prob. 2SQPCh. 11 - Prob. 3SQPCh. 11 - Prob. 4SQPCh. 11 - Prob. 5SQPCh. 11 - Prob. 6SQPCh. 11 - Prob. 7SQPCh. 11 - Prob. 8SQPCh. 11 - Prob. 9SQP
Ch. 11 - Prob. 10SQPCh. 11 - Prob. 11SQPCh. 11 - Prob. 1SQCh. 11 - Prob. 2SQCh. 11 - Prob. 3SQCh. 11 - Prob. 4SQCh. 11 - Prob. 5SQCh. 11 - Prob. 6SQCh. 11 - Prob. 7SQCh. 11 - Prob. 8SQCh. 11 - Prob. 9SQCh. 11 - Prob. 10SQCh. 11 - Prob. 11SQCh. 11 - Prob. 12SQCh. 11 - Prob. 13SQCh. 11 - Prob. 14SQCh. 11 - Prob. 15SQCh. 11 - Prob. 16SQCh. 11 - Prob. 17SQCh. 11 - Prob. 18SQCh. 11 - Prob. 19SQCh. 11 - Prob. 20SQ
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- 35 When a recessionary gap exists, actual output______ potential output and the rate of inflation will tend to ____. a. is less than; decrease b. is less than; increase c. exceeds; decrease d.equals; remain the same e.exceeds; increasearrow_forwardAccording to the Keynesian framework, ____________ in _______________ may cause inflation, but not a recession. a. decrease; interest rates b. an increase; domestic spending c. a decrease; a major trading partner's economy d. a decrease; a mayor trading partner's export prices I believe the correct answer is the increase in domestic spending because it will cause inflation but will shift AD to the right. What do you think?arrow_forwardSuppose the economy is experiencing a recessionary gap. In the long run, if there is no government intervention, the nominal wages will ______, unemployment will _____, and the price level will _______. A.fall; rise; fall B.fall; fall; fall C.rise; fall; rise D.rise; rise; risearrow_forward
- An economic recession means that _______. a. GDP is critically high b. Output and employment is down c. Employment is increasing d. Output is increasingarrow_forwardWhich of the following expectations will NOT increase spending? a. Employment b. Laying off c. Maturity of Investment d. Promotionarrow_forwardVII. Assume that the economy starts at the natural level of output. Now suppose there is a decline in business confidence, so that investment demand falls for any interest rate. a. In an AD-AS diagram, show what happens to output and the price level in the short run and the medium run. b. What happens to the unemployment rate in the short run and in the medium run?arrow_forward
- Use the AD/AS model to show how increases in government spending can lead to more inflation.arrow_forwardThink about the business cycle: during a recession, unemployment increases; it decreases in an expansionary phase. Explain what happens to TANF, SNAP, and Medicaid programs at each phase of the business cycle (recession, trough, expansion, and peak).arrow_forwardIn the Keynesian framework, which of the following events might cause a recession? Which might cause inflation? Sketch AD/AS diagrams to illustrate your answers. A large Increase In the price of the homes people own. Rapid growth in the economy of a major trading partner. The development of a major new technology offers profitable opportunities for business. The Interest rate rises. The good imported from a major trading partner become much less expensive.arrow_forward
- John Maynard Keynes fundamentally disagreed with Adam Smith in that according to Keynesian Theory: A.nominal wages and prices are not sticky in the short run. B.nominal wages, prices and interest rates can all be adjusted in the short run. C.interest rates and taxes are inelastic in the short run. D.interest rates and prices are not flexible in the short run.arrow_forwardTypically, when will the National Bureau of Economic Research (NBER) announce that the economy is in a recession? A. on the date that the recession begins B. typically, more than 10 years after the recession begins C. about six months before the recession begins D. a year or more after the recession has begunarrow_forward36 The self-correcting tendency of the economy means that recessionary gaps are eventually eliminated by: a. rising inflation b.increasing potential output c.government policy. d.decreasing potential output. e. falling inflation.arrow_forward
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