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Jacket
Economics, 7/e
David Begg, Birkbeck College, University of London
Rudiger Dornbusch
Stanley Fischer
Business cycles

Self-test Questions

Select the radio button corresponding to your choice of answer for each question, and then click on "Submit Answers" to find out how many you answered correctly.

1

The business cycle describes fluctuations in output around the ___________
A)trend path of output
B)boom
C)recession
D)short-run fluctuations in output
2

All of the following are parts of the business cycle except __________
A)boom
B)slump
C)recovery
D)acceleration
3

The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the __________
A)sun spot theory
B)multiplier-accelerator model
C)Solow theory
D)New classical theory
4

The multiplier-accelerator model assumes _________ depends on ___________
A)consumption, expected future profits
B)investment, interest rates
C)investment, expected future profits
D)stockbuilding, interest rates
5

Real business cycle theory suggests that _________ not important in explaining short-term fluctuations around actual output
A)aggregate supply is
B)aggregate demand is
C)potential output is
D)real variables are
6

The impossibility of negative gross investment provides a _________ to fluctuations in _______
A)ceiling, stockbuilding
B)ceiling, capital prices
C)floor, output
D)floor, the capital-output ratio
7

Real business cycles are cycles in ____________
A)potential output
B)actual output
C)real output
D)international trade
8

Real business cycle theories suggest that ____________ to correct departures from the desired growth path
A)there is a role for fiscal policy
B)there is a role for monetary policy
C)there is a role for supply-side policies
D)there is no case for stabilising output over the business cycle
9

The business cycle is not transmitted from one country to another through __________
A)private sector imports and exports
B)economic policy
C)the duration of compulsory education
D)labour supply changes
10

The political business cycle arises because politicians interfere with the economy for political advantage
A)TRUE
B)FALSE
11

Output can exceed demand during the recovery phase as firms restore stocks to their target levels
A)TRUE
B)FALSE
12

Increasing globalisation suggests that countries' trade cycles may be independent of one another
A)TRUE
B)FALSE






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