RBC theory leads to ________ government macro-stabilization policy, due to the theory's assumption of ________
A) a rationale for, slow wage and price adjustment
B) a rationale for, continuous market-clearing
C) a rejection of, slow wage and price adjustment
D) a rejection of, continuous market-clearing
D
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A decrease in government transfer payments
A) increases aggregate demand. B) increases the aggregate quantity demanded. C) decreases the aggregate quantity demanded. D) decreases aggregate demand.
Negative correlation between x and y implies that
A) when x is high, y is high. B) when x is high, y is low. C) xy < 0. D) x/y < 0.
The slope of the consumption function is equal to the marginal propensity to save.
Answer the following statement true (T) or false (F)
The following is likely to occur after a ________ shock: [AD? ? Y? ? T? ? deficit? ? G? ? AD? ? Y?].
A. positive aggregate demand B. positive aggregate supply C. negative aggregate demand D. negative aggregate supply