Macroeconomics 8th Canadian Edition Andrew Abel – Test Bank

Macroeconomics 8th Canadian Edition Andrew Abel – Test Bank

Macroeconomics, Cdn. 8e (Abel et al.)
Chapter 8 Business Cycles

8.1 Multiple-Choice Questions

1) The low point in the business cycle is referred to as the
A) contraction.
B) recession.
C) trough.
D) depression.
Answer: C
Diff: 1 Type: MC Page Ref: 229

2) The high point in the business cycle is referred to as the
A) expansion.
B) boom.
C) peak.
D) turning point.
Answer: C
Diff: 1 Type: MC Page Ref: 229

3) When aggregate economic activity is increasing, the economy is said to be in
A) an expansion.
B) a contraction.
C) a peak.
D) a turning point.
Answer: A
Diff: 1 Type: MC Page Ref: 229

4) When aggregate economic activity is declining, the economy is said to be in
A) a contraction.
B) an expansion.
C) a trough.
D) a turning point.
Answer: A
Diff: 1 Type: MC Page Ref: 229

5) Turning points in business cycles occur when
A) a new business cycle is initiated at the trough.
B) the economy hits the peak or trough in the business cycle.
C) the business cycle begins to follow a new pattern that differs from previous business cycles.
D) a new business cycle is initiated at the peak.
Answer: B
Diff: 1 Type: MC Page Ref: 230

6) Research on the effects of recessions on the real level of GDP shows that
A) recessions cause only temporary reductions in real GDP, which are offset by growth during the expansion phase.
B) recessions cause large, permanent reductions in the real level of GDP.
C) recessions cause both temporary and permanent declines in real GDP, but most of the decline is temporary.
D) recessions cause both temporary and permanent declines in real GDP, but most of the decline is permanent.
Answer: C
Diff: 1 Type: MC Page Ref: 230

7) Business cycles all display the following characteristics except
A) a period of expansion followed by one of contraction.
B) co-movement of many economic variables.
C) rising prices during an expansion and falling prices during the contraction.
D) they last a period of one to twelve years.
Answer: C
Diff: 1 Type: MC Page Ref: 230

8) The tendency of many different economic variables to have regular and predictable patterns across industries over the business cycle is called
A) persistence.
B) comovement.
C) periodicity.
D) recurrence.
Answer: B
Diff: 1 Type: MC Page Ref: 230

9) The fact that business cycles are periodic but not recurrent means that
A) business cycles occur at predictable intervals, but do not last a predetermined length of time.
B) the business cycle’s standard contraction-trough-expansion-peak pattern has been observed to recur over and over again, but not at predictable intervals.
C) business cycles occur at predictable intervals, but do not all follow a standard contraction-trough-expansion-peak pattern.
D) business cycles last a predetermined length of time, but do not all follow a standard contraction-trough-expansion-peak pattern.
Answer: B
Diff: 1 Type: MC Page Ref: 230

10) The tendency for declines in economic activity to be followed by further declines, and for growth in economic activity to be followed by more growth is called
A) persistence.
B) comovement.
C) periodicity.
D) recurrence.
Answer: A
Diff: 1 Type: MC Page Ref: 230