According to real business cycle theory, an increase in financial frictions might lead to ________, if ________
A) a decrease in output; the rise in the credit spread causes a leftward shift of aggregate demand
B) a decrease in inflation; the disruption of capital markets results in a leftward shift of long-run aggregate supply
C) a decrease in output; the disruption of capital markets results in a leftward shift of long-run aggregate supply
D) a decrease in output; a decline in expected output causes a leftward shift of aggregate demand
C
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Investment spending includes spending on:
A. capital goods, residential housing, and changes in inventories. B. goods and services by federal, state, and local governments. C. durables, nondurables, and services. D. stocks, bonds, and other financial instruments.
Which of the following is considered a nonrenewable resource?
A. Sunlight B. Rivers C. Natural gas D. Wind
Which of the following is considered an advantage of a sole proprietorship?
A. profit taxed only once B. limited liability for owner C. easy to raise large sums of capital D. permits effective specialization
Models should:
A. not be applied to microeconomics. B. attempt to include every detail of the situation being studied. C. describe a real life situation accurately. D. attempt to describe a situation with perfect accuracy.