What appears to be the immediate cause of most changes in the business cycle from the perspective of most economists?
What will be an ideal response?
The immediate cause of the business cycle in real GDP and employment is unexpected changes in the level of total spending according to most economists. When total spending declines unexpectedly, businesses find that they can sell fewer of their products, prompting them to reduce current production and employment. The opposite occurs when unexpected spending increases. When prices are sticky and consumers purchase more products, businesses find it more profitable to increase current production to meet the demand and employ more workers.
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Typically the largest component of the narrowly-defined money stock in the United States, known officially as M1, is
A) commercial bank reserves. B) currency in commercial bank vaults or the hands of the public. C) demand deposits and savings deposits in commercial banks. D) checking account deposits. E) gold, silver, coins, and paper currency.
To calculate the price elasticity of supply, we divide
A) rise by the run. B) the average price by the average quantity supplied. C) the percentage change in price by the percentage change in quantity supplied. D) the percentage change in quantity supplied by the percentage change in price.