To understand what causes the business cycle, leading variables alone are of interest. Coincident and lagging variables merely display the consequences of changes in the economy. Respond
What will be an ideal response?
The comment confuses correlation with causation. A leading variable is not necessarily causing the economy's moving through the cycle. It might, instead, be a result of some underlying process; a result that happens to become evident relatively early. Coincident and lagging variables do not merely appear on the stage after the causation is "done." They may point to powerful processes that happen to become fully evident only after other variables have responded to their effects. The reason that short-run economic fluctuations recur — and so invite the name "cycle" — is that most economic variables are continually affected by and affecting other variables; today's "effect" is tomorrow's "cause."
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One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons
Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is A) constant because coffee production decreased by the same amount each time. B) decreasing, since the increase in banana production is less at each point considered. C) 16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. D) increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.
The Humphrey-Hawkins Act requires the Fed to promote
A) stable prices. B) maximum employment. C) moderate long-term interest rates. D) all of the above E) none of the above