The
Explanation of Solution
During the period of a recession, the economy will face the leftward shift in the Aggregate Demand and
Thus, the real GDP of the economy, the consumption spending and the investment spending would decline during the period of recession in the economy. The macroeconomic variable that increases during the period of recession is the unemployment rate.
Concept introduction:
Economic fluctuations: They are the fluctuations in the level of
Recession: It is one important phase in the business cycle. This phase is the movement of the economy from the peak point of prosperity towards the depression which is the lower point of the economic business cycle.
Want to see more full solutions like this?
Chapter 23 Solutions
EBK ESSENTIALS OF ECONOMICS
- Suppose most business executives expect a slowdown in the economy. How might this situation affect the economy?arrow_forwardWhat factors influence the demand for non-durable goods during an economic recession?arrow_forwardRecessions hit parts of the economy differently. What part of the economy is usually hurt the most during a recession? Durable goods. Non-durable goods Consumer non-durable goods Consumer services like dentist appointmentsarrow_forward
- The government of Australia has embarked on various policies in order to reduce the severity of COVID 19 on the economy. Has COVID 19 caused economic expansion or a recession? Explain your answer using at least two economic effects on the economy of Australiaarrow_forwardSuppose most business executives expect a slowdown in the economy (slower sales growth for their firm). How might that affect the economy?arrow_forwardWhat happens to each sector of the economy when recession occurs?arrow_forward
- When does macroeconomic equilibrium occur? Multiple Choice When exports equal imports. When the aggregate supply equals the long-run Aggregate Supply When the aggregate demand equals the long-run Aggregate Supply. When the aggregate quantity demanded is equal to the aggregate quantity supplied.arrow_forwardWhat change does recession has on the price and output level when the change in aggregate demand is less than change in aggregate supply ?arrow_forwardConsidering the formula for Aggregate Demand (Also known as the product market) answer the following question:Name two macroeconomic variables (from this formula) that decline when the economy goes into recession, and explain why this happens?Name one macroeconomic variable (from this formula) that rises during a recession, and explain why this happens?arrow_forward
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningBrief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co