Uncertainty Tends to Amplify Business Cycles Because

question 170

Multiple Choice

Uncertainty tends to amplify business cycles because:

• A) many investments are irreversible with large sunk costs;thus investors decrease investment during bad times and wait until they are more certain about the future direction of the economy.
• B) fewer people tend to go to college during recessions because of the uncertainty in the job market and thus lower education leads to lower productivity.
• C) investment tends to correlate with prices and therefore both prices and investment tend to rise during booms and decrease during recessions.
• D) resource providers have less demand for their materials during recessions and thus less certain sales expectations.

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Definitions:

Duodenum

First part of the small intestine, where chyme enters from the stomach.

Peptidases

Enzymes that break down peptides into amino acids by cleaving the peptide bonds between amino acids.

Small Intestine

In vertebrates, the portion of the digestive tract that precedes the large intestine. In humans, consists of the duodenum, jejunum, and ileum.

Cardiovascular Disease

A class of diseases that involve the heart or blood vessels, including coronary artery disease and stroke.