During the recession phase of the business cycle
A) unemployment is usually falling. B) production is usually rising.
C) interest rates are usually falling. D) income is usually rising.
C
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Consider an initial IS-LM equilibrium with normally-sloped curves. An increase in government spending shifts the ________ by a horizontal distance equal to the change in government spending ________
A) IS curve to the right, divided by the Chapter 3 multiplier B) IS curve to the right, times the Chapter 3 multiplier C) IS curve to the left, times the interest rate at the initial equilibrium D) LM curve to the right, divided by the Chapter 3 multiplier E) LM curve to the right, divided by the interest rate at the initial equilibrium
If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have
A) dementia. B) bounded rationality. C) Pareto inefficiency. D) a maximin problem.