Describe the phases of the business cycle. In what ways is the business cycle illustrated in Exhibit 1 like a roller-coaster ride? In what ways is it different?
Answer to relevant QuestionsWhat is the difference between nominal and real GDP? What is cost-push inflation? What might cause it? How does the problem of double counting arise in calculating GDP, and how is it corrected? Imagine a three-firm, three-stages-of-production economy that produces one final good: a desk. Calculate the value added at each stage of production. Consider the variables income, consumption, and investment. One relationship among them is relatively stable, the other quite volatile. Discuss.
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