The business cycle is the
A) regular growth rate of the real GDP.
B) regular fluctuations of real GDP below potential GDP.
C) irregular fluctuations of prices around real GDP.
D) irregular fluctuations of real GDP around potential GDP.
D
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The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate b. the classical model is flawed and inaccurate c. the two models measure completely different aspects of the economy d. in the short run, spending affects output, but not in the long run e. in the short run the role of government in helping the economy return to equilibrium is not considered
The supply curve illustrates that firms:
A. decrease the supply of a good when its price rises. B. increase the quantity supplied of a good when its price rises. C. increase the supply of a good when its price rises. D. decrease the quantity supplied of a good when input prices rise.