Jackson buys an automobile insurance policy and then decides to drive recklessly because he knows he is insured in case he has an accident. This describes the problem of

Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?

A. A reduced amount of excess capacity. B. Increased government spending on military equipment. C. An appreciation of the U.S. dollar. D. Increased consumer optimism regarding future economic conditions.

The recurrent ups and downs in the level of economic activity extending over several years are a description of:

a. A noncyclical fluctuation b. A business cycle c. A business trough d. A recession