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The Business Cycle Answers

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Why might buying a home during a recession be a good decision for some consumers? Choose three answers.Housing prices are down.It is easier to get a mortgage.Less demand means more options for buyers.Less demand means less competition with other buyers.Fewer houses are on the market.

H
Housing prices are down.
I
It is easier to get a mortgage.
L
Less demand means more options for buyers.
L
Less demand means less competition with other buyers.
F
Fewer houses are on the market.
2
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Read a passage from a speech given by President Barack Obama.Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit . . . And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits.–President Barack Obama, February 4, 2009

A
It describes government measures to stimulate demand and bring about a recovery.
B
It describes government measures to increase production and bring about a depression.
C
It describes a shift in government policies during a trough on the business cycle.
D
It describes a shift in government policies during a peak on the business cycle.
3

best

C
Consumers spend less, causing worker layoffs.
D
Demand falls, causing production to stay at its peak.
A
A recession begins, causing consumers to spend more.
G
Goods are overproduced, causing a surplus in jobs.
4

The graphs show the US unemployment rate and the price of whole milk between 2006 and 2012.

Question illustration
T
There is no link between prices and unemployment.
R
Rising unemployment rates drive prices higher.
F
Falling prices drive unemployment rates lower.
A
As unemployment rates rise, average prices fall.
5

Which of the following conditions is most indicative of recovery?

A
The economy has stopped shrinking.
B
The economy begins to peak.
C
The GDP continues to shrink.
D
The economy is growing again.
6

During a recession, what is one way governments try to encourage growth?

b
by increasing unemployment benefits
b
by stopping government spending
b
by requiring firms to maintain production
b
by eliminating all tax breaks
7

Which of the following is a characteristic of prosperity in the peak phase of the business cycle?

s
stagnant prices
h
high levels of production
a
ambivalence about the economy
r
reduced incomes
8

This is a graph of the business cycle.Time is measured along the x-axis. What is measured along the y-axis?

Question illustration
A
employment levels
B
prices
C
economic output
D
demand
9

Which stage of the business cycle is an economy in when it reaches its low point?

A
Expansion
B
Peak
C
Contraction
D
Trough
10

Which statement best describes why it is difficult to sell a home during a recession?

M
Mortgage rates are high.
D
Demand greatly decreases.
M
Mortgages become unavailable.
H
Housing prices increase.

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The Business Cycle Answers — MO-Economics