Week 6 — Quiz · Business Cycles & Short-Run Fluctuations
Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 5 · 10 questions · 10 points · closed to AI · one attempt
Auto-graded (Classic QTI): see F-quiz-week-06-qti.xml for the Canvas import. Every numeric answer is pre-computed; every gap/curve-position claim is verified.
The questions (human-readable; answer key below)
Q1. Starting from a low point, the correct order of the business-cycle phases is —
A) Peak, Expansion, Trough, Recession B) Trough, Expansion, Peak, Recession C) Recession, Peak, Expansion, Trough D) Expansion, Trough, Recession, Peak
Q2. Potential output (Y) is best described as —
A) The absolute most an economy could ever produce, no matter what B) The sustainable, full-employment level of output the economy tends toward* C) Last quarter's actual GDP figure D) The level of output only reached during a recession
Q3. An economy has potential output of 1,000 and actual output of 985. What is the size of the gap, and which type is it?
A) 15, recessionary B) 15, inflationary C) 985, recessionary D) 1.5, recessionary
Q4. Using the same economy (potential output 1,000, actual output 985), what is the gap as a percentage of potential?
A) 15% B) 1.5% C) 0.15% D) 98.5%
Q5. On the AD–AS diagram, an economy's AD and SRAS curves cross at a real output level to the RIGHT of the vertical LRAS line (drawn at potential output). This describes —
A) A recessionary gap; output below potential B) An inflationary gap; output above potential C) No gap at all; output exactly at potential D) A leftward shift of the LRAS curve itself
Q6. Which statement correctly describes how the NBER officially dates U.S. recessions?
A) By an automatic rule: exactly two consecutive quarters of negative real GDP growth B) By a committee that judges multiple indicators together (income, employment, production, sales, and GDP), identifying peak and trough months C) By a single stock-market index crossing a threshold D) By a congressional vote each quarter
Q7. (True/False) "Two consecutive quarters of negative real GDP growth" is the NBER's official definition of a U.S. recession. → False
Q8. (Select all that apply.) Which of the following statements are TRUE?
☑ A) A recessionary gap means actual output is below potential output ☐ B) Potential output is a hard ceiling the economy can never exceed ☑ C) Okun's law is a rule of thumb, not a precise law ☑ D) An inflationary gap typically shows up as rising inflation pressure ☐ E) A point inside an economy's PPF is the same thing as an inflationary gap
Q9. In the classical self-correction view, what closes a recessionary gap over time without government action?
A) Rising government spending shifting AD to the right B) Falling wages and prices shifting SRAS to the right, back toward potential C) A rising money supply lowering interest rates D) Rising tariffs reducing imports
Q10. (Matching) Expansion → The phase in which real output is rising; Peak → The high point before a downturn begins; Recession → The phase in which real output is falling; Trough → The low point before the next expansion begins; Recessionary gap → Actual output below potential output.
Answer key & feedback (instructor)
| Q | Type | Answer | Feedback (the idea) |
|---|---|---|---|
| 1 | MC | B | From a trough (low point), output rises through expansion to a peak (high point), then falls through recession back toward the next trough. |
| 2 | MC | B | Potential output is the sustainable, full-employment level — a "cruising speed," not an unbreakable ceiling; actual output can run above or below it. |
| 3 | MC | A | 1,000 − 985 = 15; since actual output is BELOW potential, this is a recessionary gap of 15. |
| 4 | MC | B | 15 ÷ 1,000 × 100 = 1.5% of potential — always divide by potential (the base), not by actual output. |
| 5 | MC | B | Right of the vertical LRAS line means actual output is ABOVE potential — an inflationary gap, typically showing rising inflation pressure. |
| 6 | MC | B | The NBER's Business Cycle Dating Committee judges several indicators together and identifies peak/trough months — there is no single automatic formula. |
| 7 | TF | False | "Two negative quarters" is a popular, useful rule of thumb, not the NBER's official method (committee judgment across multiple indicators). |
| 8 | MA | A, C, D | B is false (potential output is NOT a hard ceiling — the economy can run above it, unsustainably). E is false (an interior PPF point is idle/unused resources, unrelated to an inflationary — above-potential — gap). |
| 9 | MC | B | Self-correction works through flexible wages/prices: above-natural-rate unemployment pushes wages down, lowering costs and shifting SRAS right — no policy tool required, in this view. |
| 10 | Match | as above | Each business-cycle phase and the recessionary-gap definition matched to its correct description; distractor risk is confusing "expansion" (rising) with "recession" (falling) or misplacing "recessionary gap" as an inflationary concept. |
Quantitative gate: PASS — every numeric answer re-computed: Q3/Q4 1,000 − 985 = 15; 15 ÷ 1,000 × 100 = 1.5% (see _build/logs/week-06-numbers.txt).
Graph-logic check: PASS — every gap/curve-position claim verified against the NUMBERS_PACK canon: Q5 right-of-LRAS = inflationary gap (above potential); Q9 self-correction runs through falling wages shifting SRAS right (not a demand-side or policy channel); LRAS stays vertical at potential throughout.
Quality gate (self-checked): every single-answer item has exactly one correct option; distractors target the named traps (subtracting/dividing the wrong way, "potential = hard max," "two negative quarters = official rule," gap direction on the AD–AS diagram, confusing an interior PPF point with an inflationary gap). No free numeric entry; no essay.
F-quiz-week-06-qti.xml) ships inside the course's .imscc package — it lands in the Canvas gradebook on import.~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com