What is a business cycle? What are its phases and turning points?
What will be an ideal response?
A business cycle is the periodic but irregular up-and-down movement in production and jobs. It has two phases and two turning points. As the economy slows and the growth in real GDP turns negative, the economy enters the recession phase of the business cycle. At the bottom of the recession phase is one turning point, the trough. As the economy moves through the trough, it enters the expansion part of the business cycle during which real GDP grows. Finally, as the economy reaches its high point and swings from an expansion to a recession, the economy passes through the other turning point, the peak.
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Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?
a. The price of paper in Republica decreased as a result of the policy change. b. Republica began exporting paper as a result of the policy change. c. The domestic demand curve for paper shifted to the right as a result of the policy change. d. The domestic quantity of paper demanded increased as a result of the policy change.
A surplus occurs whenever
A. price is above the equilibrium price. B. price is below the equilibrium price. C. price is equal to the equilibrium price. D. the supply curve is downward sloping.