Business Cycles Are Short-Term Movements In

question 7

Multiple Choice

Business cycles are short-term movements in:

• A) real GDP around its long-term trend.
• B) nominal GDP around its long-term trend.
• C) the unemployment rate above and below zero.
• D) inflation around its long-term trend.

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Definitions:

Long-Run

A period in which all factors of production and costs are variable, allowing companies the flexibility to make changes in production capacity and operations.

Few Substitutes

Refers to a market condition where there are not many alternative products or services available to consumers, which often leads to less competition and higher prices.

Inelastic Demand

A situation in which the demand for a product does not change much in response to price changes.

Close Substitutes

Products that serve similar functions or needs and can easily replace one another in the eyes of the consumer.