Purdue Econ 252 Final Practice |37 Questions| With Correct Answers.

An example of a multiplier is when​ ____________. ​(Check all that apply​.) A. a reduction in business investment is offset by increases in consumption and net exports. B. an increase in business confidence causes firms to increase production and hire​ employees, leading to an increase in household​ spending, causing firms to further increase production and employment. Your answer is correct.C. a decrease in labor demand with rigid wages causes a larger increase in unemployment than the same decrease with flexible wages. D. a drop in consumer confidence reduces household​ spending, causing firms to cut production and lay off​ employees, leading to a greater reduction in household spending. {Ans: B, D}Early theories of business cycles assumed that economic fluctuations had a​ pendulum-like structure with systematic swings in economic growth. Which property of economic fluctuations do these early theories​ contradict? A. Limited predictability. B. The inverse relationship of GDP growth and the unemployment rate. C. ​Co-movement. D. Persistence in the rate of growth. {Ans: A}The current account is a measure of​ ____________. A. net foreign direct investment. B. payments into and out of the country. Your answer is correct. C. net assets held by domestic residents. D. trade flows between