tion y insight into macroeconomics is that in the short run

tion y insight into macroeconomics is that in the short run the combined effect of individual decisions is: very much the same as what one individual intended. very different from what any one individual intended. beneficial to the economy as a whole. always perverse on the economy as a whole. Save 12 Question 2 (1 point) One role for government policy is: 15 to provide insurance to cover damages from macroeconomic fluctuations. to attempt to manage short-run macroeconomic fluctuations to subsidize private insurance for businesses to cover harm from macroeconomic fluctuations. nse to avoid Keynesian economics.

Solution

1. (iii) Beneficial to the economy as a whole.

2. (ii) To attempt to manage short-run macroeconomic fluctuations.

3. (iii) 25%.

4. (iii) Business cycle.

5. (iv) Recession.

(A sustained period in which real GDP is falling).

6. (ii) An expansion.

(B is trough, and movement from B to C is the period of expansion).

7. (i) Raising unemployment.

(Recession is a period of general economic decline and is less severe than a depression).

8. (i) A sustained rise in the quantity of goods and services produced by the country.

9. (i) Overall prices are increasing, although some prices may be increasing and some may be decreasing.

10. (iv) Exchange rates.

11. (ii) An IOU that pays interest.

12. (ii) Personal consumption, investment, government purchases, net exports.

13. (i) Net exports.

14. (iii) Real GDP per capita.

15. (i) Increase in nominal GDP.

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