Which of the following statements about economic fluctuations is true ?
Correct answer: C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together
- A. None of these answers
- B. A depression is a mild recession
- C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together
- D. A recession is when output rises above the natural rate of output
Explanation
Macroeconomic indicators such as income, spending and output generally move together, so several of them can measure economic fluctuations. A depression is severe rather than mild, while a recession involves output falling below its natural level.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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