The real business cycle theory holds that business fluctuations are caused by
A. "stop-and-go" monetary policies.
B. factors affecting aggregate demand.
C. significant changes in technology and resource availability.
D. incorrectly anticipated government stabilization policies.
Answer: C
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An assumption that makes an economic model simpler without affecting its conclusions in important ways is
a. an indication of a positive assumption b. an efficient assumption c. useful in disguising the valid conclusions d. a simplifying assumption e. a critical assumption
Taxes that change with the level of real GDP and income are called
A) flexible taxes. B) voluntary taxes. C) induced taxes. D) forced taxes. E) GDP taxes.
The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers
A) increases by $20. B) increases to $80 a textbook. C) decreases to $60 a textbook. D) is $70 a textbook. E) does not change because the demand for textbooks is perfectly elastic.
The Federal Reserve Banking Act of 1978
a. attempted to guarantee stability of the banking system b. was a reaction to the savings and loan crisis c. added full employment to the list of objectives for the Fed d. strengthened deposit insurance programs e. pledged the Fed to keep the inflation rate low