When RBC economists compare the correlations in their models to the data, what are they looking at?
A. The amount of random variation in economic variables
B. The degree to which different economic variables move together
C. The strength of procyclicality of different variables
D. The degree to which variables lead output over the business cycle
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Economic growth will tend to be higher in a country that
a. has a low savings rate. b. has an open economy that encourages the rapid spread of technology. c. has an undeveloped system of property rights. d. does not grant patents to investors.
To pay for WW I, the national debt was expanded from ___ percent of GDP at the beginning of the war to ___ percent of GDP by the end of the war
a. 1; 5 b. 2; 13 c. 3; 32 d. The national debt did not expand due to reparations payments.
Command-and-control regulation, as compared to incentive-based regulation, is:
a. efficient in the short run and in the long run. b. efficient in the short run, but not in the long run. c. inefficient in the short run, but efficient in the long run. d. inefficient in the short run and long run.