Question

Question: According to your professor, recessions

a) Are not well understood by economists, because controlled experiments are impossible in macroeconomics

b) Can be understood as typically resulting from “boom-bust” cycles caused by expansionary Fed policies

c) Have little costs in terms of social welfare

d) Are a more important policy concern than long-run economic growth

Answer 1

Answer option)Can be understood as typically resulting from “boom-bust” cycles caused by expansionary Fed policies

According to your professor, recessionsCan be understood as typically resulting from “boom-bust” cycles caused by expansionary Fed policiesDuring the boom the economy grows, jobs are plentiful and the market brings high returns to investors. In the subsequent bust the economy shrinks, people lose their jobs and investors lose money.Then it nleads towards recession