Understanding Business Cycles

6 questions

1. 1. Which of the following correctly describes the upward slope of the trend line through a business cycle?
   The economy is in a recovery phase There is a positive relationship between real GDP and the price levelThe economy's output increases in the long run
2. 2. Which of the following is most likely a characteristic of the recovery phase of the business cycle?
   Upward pressure on the price level begins to build Output reaches its maximum levelA recession will soon follow
3. 3. Which of the following is not a phase of the business cycle?
   Unemployment ProsperityRecession
4. 4. This type of unemployment results from the time lag necessary to match employees who seek work with employers needing their skills.
   Frictional unemploymentStructural unemploymentCyclical unemployment
5. 5. Which of the following situations will most likely lead to demand-pull inflation?
   A leftward shift in the aggregate supply curve A rightward shift in the aggregate supply curve A rightward shift in the aggregate demand curve
6. 6. Cost-push inflation refers to an increase in the price level due to:
   A shift to the right in the aggregate supply curve Rising costs of critical inputs such as energy, labor, and capital Excessive government spending