A Government Policy That Is Consistent with Real Business Cycle

question 46

Multiple Choice

A government policy that is consistent with real business cycle theory would be for

• A) government to vary its spending in response to shocks to total factor productivity.
• B) the monetary authority to expand and contract the nominal money supply in response to shocks to total factor productivity.
• C) government to smooth out tax distortions over time.
• D) government to vary its lump-sum tax collections in response to changes in total factor productivity.
• E) government to vary its spending and taxation decreases in response to shocks that affect the price level.

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Definitions:

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The ability to create, understand, and appreciate art and its aesthetic values.

New Problems

Unfamiliar or unforeseen challenges that require critical thinking and innovative solutions.

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The capacity to apply acquired understanding and past experiences.