Author Question: The current account balance equals the value of net exports. Indicate whether the statement is ... (Read 128 times)

KWilfred · **on:** Jun 29, 2018

The current account balance equals the value of net exports.

Indicate whether the statement is true or false

Question 2

How are unemployment, inflation, and the business cycle related?

What will be an ideal response?

Madisongo23 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

FALSE

Answer to Question 2

A recessionary phase of a business cycle usually begins with decreased investment spending by firms or with reductions in consumption spending. As spending decreases firms' sales decrease, and firms begin laying off workers, thereby increasing unemployment. As firms find it more difficult to sell their goods they will also find it more difficult to raise prices and the rate of inflation will be relatively low. As the economy moves toward the expansionary phase of the business cycle firms begin to increase investment spending, households begin to increase their spending, and unemployment begins to fall. As spending increases producers find it easier to raise prices and the rate of inflation tends to rise during this expansionary phase.