Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.
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1. Keynesian economics
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a. holds that innovations or productivity shocks in one sector can spread to the rest of the economy and cause recessions and booms. |
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2. Business cycles
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b. occur because consumers, businesses, or government change spending relative to the economy's productive capacity. |
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3. Recession
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c. fluctuations in total national output, income, and employment, usually lasting 2-10 years, marked by periods of expansion or contraction in most sectors of the economy. |
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4. Depression
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d. attribute business fluctuations to the expansion and contraction of money and credit. |
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5. Shifts in aggregate demand
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e. proposes that exogenous shocks are propagated by the multiplier mechanism. |
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6. Monetary theories
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f. a recurring period of decline in total output, income, and employment, usually lasting from 6 months to a year and marked by widespread contractions in many sectors of the economy. |
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7. Equilibrium-business cycle theories
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g. states that changes in aggregate demand can affect output, employment, and prices in the short-run. |
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8. Real-business cycle theory
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h. claim that misperceptions about price and wage movements lead individuals to supply too much or too little labor, which leads to fluctuations of output and employment. |
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9. Multiplier-accelerator model
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i. a large, long recession. |
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10. Econometric model
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j. the total amount of output that is willingly bought at a given level of price. |
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11. Aggregate demand
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k. could be carried out by decreasing government spending. |
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12. Contractionary fiscal policy
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l. a set of equations, presenting the behavior of the economy, that has been estimated using historical data. |
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13. Increase in the money supply
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m. an expansionary monetary policy. |
