If Business Cycles Are Caused by Changes in Aggregate Demand,you

question 16

Multiple Choice

If business cycles are caused by changes in aggregate demand,you would expect to see

• A)prices and unemployment moving in the same direction.
• B)price and unemployment moving in opposite directions.
• C)prices not moving with unemployment.
• D)unemployment is not included in the Keynesian model.

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Definitions:

Normative Statement

An opinion or judgment that reflects what one believes ought to be, as opposed to what actually is; it cannot be proven true or false.

Positive Statement

An objective statement based on factual information and evidence, which can be tested and verified as true or false.

Production Possibilities Frontier

A graph that illustrates the highest possible production levels of two products, based on available resources and technological capabilities.

Scarcity

A basic economic challenge where human desires appear endless but the resources available are finite.