What is a recession?
What will be an ideal response?
A recession is a period of time during which real GDP decreases, so that the growth rate of real GDP is negative, for at least two successive quarters. A recession occurs starts after a peak in the business cycle and ends before a trough in the business cycle. During a recession, real GDP falls below potential GDP.
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Governments are often forced to bail out large banks to prevent the entire economy from being affected adversely. This provision often encourages banks to invest in risky assets. This is an example of ________
A) moral hazard B) a positive externality C) adverse selection D) anchoring
According to the text, over 40 percent of member nations of the International Monetary Fund have
A) a fixed exchange rate. B) no separate legal currency. C) an independently floating exchange rate. D) a managed floating exchange rate.