Real business cycle theory differs from the Schumpeterian innovation cycle in that it
a. sees no cyclical patterns, only unevenness in the economy's growth path
b. calls for a constant injection of government spending
c. projects clear and discernible business cycles
d. focuses on technological change while the innovation cycle does not
e. emphasizes the critical role of countercyclical fiscal policy
A
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The FE line
A) is horizontal. B) is vertical. C) slopes downward. D) slopes upward.
Suppose the economy is initially in short-run equilibrium and the Fed decreases the nominal money supply. If the price level remains constant, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If the government undertakes expansionary fiscal policy, it might:
A. increase income taxes. B. decrease income taxes. C. decrease government spending. D. increase corporate income taxes.
Refer to Figure 10.1. Suppose the individual is initially at point b. Based on the figure, the individual could afford to increase his utility by:
A. consuming more today and less tomorrow.
B. consuming more today and more tomorrow.
C. consuming more tomorrow and less today.
D. consuming less today and less tomorrow.