Question

Business cycles examine __________ time horizons, while the aggregate demand-aggregate supply model considers __________ time horizons.

a. both short- and long-run; long-run

b. short-run; both short- and long-run

c. long-run; short-run

d. short-run; long-run

Answer 1

The answer is: b

Step-by-step explanation:

Business cycles are the cumulative periods of expansion, contraction, recession and recovery in an economy. These periodic fluctuations can be observed via analysing the real output produced by a country within a specified period. These fluctuations occur in a period of 5 years or less. The aggregate demand- aggregate supply model is a macroeconomic model that examines the relationship between real output and prices. This model provides a basis of examining both short run as well as long run changes in a country's national output.