According to Real Business Cycle Theorists, the Tendency of Money

question 26

Multiple Choice

According to real business cycle theorists, the tendency of money to lead output may be due to

• A) government spending shocks, which lead to later changes in economic activity, and the tendency for bank loans to expand in advance of real activity that will occur at a later date.
• B) the tendency for bank loans to expand in advance of real activity that will occur at a later date and the Bank of Canada's use of all available information in trying to stabilize the price level.
• C) the Bank of Canada's use of all available information in trying to stabilize the price level and the Bank of Canada's use of all available information in trying to stabilize the level of economic activity.
• D) the Bank of Canada's use of all available information in trying to stabilize the level of economic activity and government spending shocks, which lead to later changes in economic activity.
• E) the Bank of Canada's use of all available information in trying to stabilize business cycle fluctuations and the price level.

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Definitions:

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