Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________

Increased investment spending in the economy would be a possible result of

A) an increase in interest rates. B) a decrease in the money supply. C) an open market sale of bonds by the Fed. D) an open market purchase of bonds by the Fed.

Business cycle persistence refers to the property that

A) real GDP is rarely exactly at trend. B) booms and recessions last a long time. C) when real GDP is above trend, it tends to stay above trend, and when it is below trend, it tends to stay below trend. D) business cycles are persistently hard to predict.