IV. a) What are the two ways to represent the business cycle on the graphs and to show the GDP
gaps? Draw both and give your explanations b) What is the difference between procyclical,
countercyclical and acyclical variables? Explain. Define the type of each variable listed below
(Instruction: do not rewrite the list, just put the numbers for each type) (i) budget deficit; (ii)
firms profits; (iii) consumption spending; (iv) number of unemployed; (v) budget revenues; (vi)
net exports; (vii) interest rate; (viii) business inventories; (ix) exports; (x) aggregate incomes;
(xi) sum of unemployment insurance payments; (xii) price level; (xiii) sum of pension payments;
(xiv)investment spending; (xv) private sector saving; (xvi) imports; (xvii) demand for money;
(xviii) indirect tax revenues; (xix) government purchases; (xx) financial assets prices; (xxi) rate
of depreciation; (xxii) real estate prices; (xxiii) supply of loanable funds
Solution
b) A procyclical variable moves in the same direction as aggregate economic activity. A
countercyclical variable moves oppositely to aggregate economic activity.An acyclical variable
does not display a clear pattern over the business cycle.
(i) A budget defecit is an indicator of an economy which defines expenditure exceeds revenue.It
is the difference between all receipts and expenses in revenue and govt. capital account
(ii) A firm makes profit , when its total revenue exceeds total cost in the long run. It is necessary
for a firm to make profit to continue producing goods and survive in the industry.
(iii) Housholds buy goods and services in order to fulfill their needs with money as medium of
exchange. Basically Consumer spending is which consumers spends to purchase the required
goods and services
(iv) The no. of unemployed of a country can be defined by the difference of Total labour force
and no. of employed person
(v) The money allocated for maintenance and growth of business is revenue of budget. A
revenue budget managed efficient allocation of resources and is the result of a business\'s
forecasts of sales revenue, expenses and capital expenditures.
(vi) Net export is the difference between a country\'s total export and the country\'s total import.
It is used to calculate the Gross Deomestic Product of the country
(vii) The interest rate is the percent of principal charged by the lender for the use of its money.
Banks pay interest rate , when we deposit money , as the bank is now borrower and we are the
lender.
(viii) The collection of products that are avaiable to sell to businesses or consumers.
(ix) The total amount of goods or services that are sold in foreign markets, defined export.
(x) Aggregate income is total of all income of a country. It includes all the factors (i.e
inflation,taxation) without adjustment.
(xi) The insurance is a govt. welfare policy, where a empolyed person becomes unemployed
though not for his personal fault and because of some market or economical problems, that
perso.
Money in the United States today includes O A. the currency in people.pdf
1. Money in the United States today includes O A. the currency in people's wallets, stores' tills,
and the bank deposits that people and businesses own O B. the banks' reserves and bank
deposits owned by individuals and businesses ° C. currency and deposits at both banks and the
Fed O D. currency in ATMs and people's bank deposits
Solution
ANSWER:
The correct answer is option a because today in united states currency outside of banks are part
of money.
