Each statement is either true or false. If it is false correct it. In correcting the statement change as little as possible. Underline or italicize the portion you changed. Justify the statement. The justification should show that you understand the issue(s) being addressed. Do not be superficial. Your written statements should be complete and not refer to passages or pages in the text. Grammar, spelling, and punctuation are always important (think of me as your boss, would you turn in an illiterate report to him/her) and will affect your grade.

answers must be at least 700 words

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Portions in bold CANNOT be changed.

1. The NBER dating committee determines if we are in a recession and when it is over. It is not clear why it is needed since two declining quarters of economic growth is a reliable predictor of the start of a recession. In addition, since all macroeconomic variables are coincidental with GDP growth the dating committee could use a variety of macroeconomic variables.

2. Business cycles can be seen on an AS-AD graph (where AS is perfectly elastic). Assuming we are starting at full employment, when we go into a recession the first thing that shifts is the LRAS curve (shifts left). This shows that output has declined. After we hit the trough the curve shifts right. It generally only takes 6 months to get back to full employment. An AS-AD graph is required

3. When comparing the unemployment rate to a recession\, Figure 8.8 shows that unemployment starts to rise at the beginning of a recession and decline at the bottom of the trough. A scan or snippet of Figure 8.8 needs to be in your answer and your written answer must carefully analyze during the last 7 recessions shown on the graph.

4. Major wars have no impact on the length of both expansions. In addition, the length of expansions has been fairly constant since the Federal Reserve was created, the same can be said for the length of contractions. Your answer needs to provide a table that you can use in your written answer.