economics test
If a country has a trade deficit, does it indicate that the country has a serious problem?
No. Trade deficits occur when a country's investment spending is higher than its level of saving.
When the value of a nation's imports exceeds the value of that nation's exports, the nation is said to have:
a trade deficit
When an economy is operating between the business cycle trough and the business cycle peak, it is called:
an expansion
Fiscal and monetary policies:
are used to correct for short-term economic fluctuations.
A contraction in the business cycle is:
called a recession
Fiscal policy involves:
deliberate changes in taxation and/or government spending
The trade balance is the difference between the value of the:
goods and services that a country sells to other countries and the value of the goods and services it buys in return.
The paradox of thrift highlights:
how individual decisions to save more may worsen a recession.
During a recession, one will often observe
rising unemployment rates and falling aggregate output.
When an economy is in an expansion, unemployment
tends to fall, and overall prices tend to rise