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:

Unprofessional Conduct

Behavior that fails to meet the established standards or ethics expected in a professional setting, often leading to disciplinary action.

Lack Of Dependability

The unreliability or inconsistency of someone or something in fulfilling obligations or producing consistent results.

U.S. Economy

The economic system of the United States, characterized by a mixed economy with both private sector freedom and governmental regulation.