According to real business cycle theorists, the tendency of money to lead output may be due to
A) government spending shocks, which lead to later changes in economic activity, and the tendency for bank loans to expand in advance of real activity that will occur at a later date.
B) the tendency for bank loans to expand in advance of real activity that will occur at a later date and the Federal Reserve's use of all available information in trying to stabilize the price level.
C) the Federal Reserve's use of all available information in trying to stabilize the price level and the Federal Reserve's use of all available information in trying to stabilize the level of economic activity.
D) the Federal Reserve's use of all available information in trying to stabilize the level of economic activity and government spending shocks, which lead to later changes in economic activity.
B
You might also like to view...
The basic classical model can account for the procyclical behavior of money if there
A) are real business cycles caused by productivity shocks. B) is reverse causation from future output to money. C) are rational expectations among the public. D) are propagation mechanisms in the economy.
If a bank has actual reserves of $40,000 and a 20 percent reserve requirement, then the maximum amount of checkable deposits the bank can have if excess reserves are zero is
a. $100,000. b. $80,000. c. $300,000. d. $20,000. e. $200,000.
When two goods are perfect substitutes, the marginal rate of substitution
a. is constant along the indifference curve. b. decreases as the scarcity of one good increases. c. increases as the scarcity of one good increases. d. changes to reflect the consumer's changing preferences for the goods.
Human resources in the poorest DVCs have the following characteristics, except:
A. Populations are large B. Unemployment and under-employment are widespread C. Population growth is low D. Labor productivity is low