What phase of the business cycle is the economy currently in? Explain your reasoning and explain how you will know when the economy enters each of the three subsequent phases.
What will be an ideal response?
Answers to this question will vary but should exhibit an understanding of the
characteristics of each of the phases of the business cycle. For example, students might
state that the economy is in expansion because real gross domestic product (RGDP)
has grown consistently over the past few quarters. They will know when the economy
hits its peak when RGDP is stagnant. When RGDP begins to decline, they will know the
economy is contracting, and when it stops declining, it will have hit its trough.
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The figure above shows the market for airline tickets. In early 2008 firms negotiated lower wages with their workers. This change is shown in the figure as a shift from
A) D0 to D1. B) D1 to D0. C) S0 to S1. D) S1 to S0.
"As Jake consumes more sodas over the course of a day, it is likely that his marginal rate of substitution of sodas for other goods will rise." Is the previous statement correct or incorrect?
What will be an ideal response?