Business Cycle Quiz

In a business cycle, a period from peak to trough may be referred to as _______.

• A) a contraction

• B) an expansion

• C) a recurrence

• D) all of the above

• E) none of the above

A procyclical variable _______.

• A) moves up during contractions and down during expansions

• B) moves in the opposite direction of aggregate economic activity

• C) moves up during expansions and down during contractions

• D) all of the above

• E) none of the above

According to the graph above, the expansion that began in December 1914 had a duration of _______.

• A) 3 years

• B) 44 months

• C) 4 years

• D) 51 months

• E) 20 months

Referring to the graph above, an economic variable that had peaked in December 1911, November 1914, and February 1919 is likely a _______ variable.

• A) leading countercyclical

• B) leading procyclical

• C) lagging countercyclical

• D) lagging procyclical

• E) none of the above

Only when the goods market is in equilibrium is it true that _______.

• A) the amount of goods and services produced equals actual expenditure

• B) planned expenditure equals the amount of goods and services produced

• C) demand for foreign goods equals foreigners' demand for domestic goods

• D) actual expenditure equals output

• E) none of the above

Consumption expenditures decrease when ________.

• autonomous consumption increases

• the real interest rate falls

• disposable income increases

• all o the above

• none of the above

The after-tax income received by the household sector is known as ________.

• A) Gross Domestic Product

• B) retained earnings

• C) disposable income

• D) net national product per capita

An intertemporal budget constraint ________.

• describes how much time an individual consumer has to spend their disposable net national product

• is independent of the real interest rate and wealth of the household

• divides consumption spending into three categories: spending on durables, non-durables and services

• describes how much a person can consume today versus tomorrow

An intertemporal budget constraint is downward sloping due to ________.

• the law of demand

• the law of diminishing marginal productivity

• the trade-off between current and future consumption

• the law of supply

Real world economic data supports the view that higher interest rates are associated with ________.

• lower saving and higher consumption

• higher saving and lower consumption

• higher saving and consumption

• lower saving and consumption