Business Cycle Persistence Refers to the Property That

question 1

Multiple Choice

Business cycle persistence refers to the property that

• A)booms and recessions last a long time.
• B)when real GDP is above trend, it tends to stay above trend, and when it is below trend, it tends to stay below trend.
• C)real GDP tends to stay in the peaks and troughs of the business cycle.
• D)real GDP is rarely exactly at trend.
• E)business cycles are persistently hard to predict.

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Definitions:

Economic Decisions

Choices made by individuals, households, or governments regarding allocation of resources and distribution of goods and services.

Excess Burden

The cost to society created by market inefficiency, which can occur through such things as government intervention in the market or taxes that distort market outcomes.

Tax Revenue

The money collected by a government from its citizens and businesses through various forms of taxation.

Property Tax

A levy on property that the owner is required to pay, often based on the value of the property.