The Random Walk of GDP Model Asserts That

question 14

Multiple Choice

The random walk of GDP model asserts that

• A)demand-side disturbances are not very important
• B)most important fluctuations occur randomly on the demand side
• C)there is a high elasticity of labor supply in response to temporary changes in wage rates
• D)there are many transitory and random fluctuations over the business cycle, but the economy always returns to its growth trend
• E)the performance of the economy is closely connected to stock market performance, which follows a random walk

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