The Random Walk of GDP Model Assumes That

question 2

Multiple Choice

The random walk of GDP model assumes that

• A)output follows a trend which can be explained by capital improvements
• B)output generally follows a steady trend but there are always some transitory business fluctuations
• C)there is no tendency for GDP to return to trend after a supply-side disturbance
• D)permanent changes in output are infrequent, so changes in aggregate demand always dominate
• E)all output fluctuations are transitory

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