Which of the Following Is True of the Real Business

question 37

Multiple Choice

Which of the following is true of the real business cycle approach to stabilization policy?

• A)It is necessary, but it should not be overused.
• B)It is necessary during recessions but not during booms.
• C)It is unnecessary because output fluctuations reflect productivity disturbances.
• D)It is unnecessary because output fluctuations are largely the result of policy mistakes by the Fed.

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Definitions:

Estimable

Capable of being reasonably estimated or calculated, often used in the context of accounting to refer to expenses or losses.

Reasonably Possible

A term used in accounting and law to describe an outcome that, while not certain, is more than a mere possibility and should be considered or disclosed.

Merchandise Inventory

Goods that are purchased for the purpose of being sold to customers in the normal course of business.

Interest Rate

The percentage of an amount of money charged by a lender to a borrower for the use of borrowed money.