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Question 01

Real GDP fluctuations are:

a) recurrent but irregular.

b) recurrent and regular.

c) rare and irregular.

d) rare and irregular.

Question 02

To plot a Burns-Mitchell diagram, one starts by identifying the (A) _________ quarter of real GDP in each business cycle, then divides the actual GDP of a quarter by the (A) _________ of its business cycle to obtain the normalized real GDP for each quarter of the business cycle. The business cycle window used to average these normalized real GDPs across different business cycles (B) _________.

a) (A) peak; (B) is the first 20 quarters immediately following the peak, including the peak.

b) (A) peak; (B) begins 10 quarters before the peak and ends 10 quarters after the peak.

c) (A) trough; (B) is the first 20 quarters immediately following the trough, including the trough.

d) (A) trough; (B) begins 10 quarters before the trough and ends 10 quarters after the trough.

Question 03

The components of private domestic spending with the exception of public spending are:

a) countercyclical

b) procyclical

c) acyclical

d) trend-cyclical

Question 04

The real money supply is an example of a _________ indicator.

a) leading

b) coincident

c) lagging

d) sometimes coincident, sometimes lagging

Question 05

Unemployment is an example of a _________ indicator.

a) leading

b) coincident

c) lagging

d) none of the above

Question 06

Investment spending is relatively (A) _________ compared to consumption spending. Part of the explanation is that investment (B) _________ .

a) (A) smooth; (B) forward looking.

b) (A) smooth; (B) a riskier activity.

c) (A) volatile; (B) forward looking.

d) (A) volatile; (B) a riskier activity.

Question 07

Theories of self-perpetuating cycles suffer from the drawback that:

a) economic history shows a pattern of greater variation in the lengths of cycles and non-explosive, non-dampened oscillations tend to be fairly special theoretical cases.

b) economic history shows a pattern of greater variation in the lengths of cycles and explosive or dampened oscillations tend to be fairly special theoretical cases.

c) economic history shows a pattern of smaller variation in the lengths of cycles and explosive or dampened oscillations tend to be fairly special theoretical cases.

d) economic history shows a pattern of smaller variation in the lengths of cycles and non-explosive, non-dampened oscillations tend to be fairly special theoretical cases.

Question 08

Short-run fluctuations in real GDP occur in the real business cycle model when:

a) prices adjust gradually.

b) shocks move short-run aggregate supply (AS).

c) shocks move long-run aggregate supply (LAS).

d) when investment depends upon the growth of real GDP.

Oxford University Press, Online Resource Centre, Chapter 14.

Chapter 14

Instructions