A Theory of Aggregate Economic Fluctuations Called Real Business Cycle

question 2

Multiple Choice

A theory of aggregate economic fluctuations called real business cycle theory holds that

• A)changes in the real money supply are the only demand shocks that affect the natural rate of output.
• B)aggregate demand shocks do affect the natural rate of output.
• C)aggregate supply shocks do affect the natural rate of output.
• D)changes in net exports are the only demand shocks that affect the natural rate of output.

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Definitions:

Inference Forms

Standard logical structures that outline the relationship between premises and conclusion, guiding the derivation of the latter from the former.

MP

A shorthand for "Member of Parliament," a representative elected to the legislative body of a country. Alternatively, in logic, it could stand for "Modus Ponens," a form of argument where from premises "If P, then Q" and "P," one concludes "Q."

Inference Forms

Structures of reasoning that establish a conclusion based on one or more premises.

MP

Stands for Modus Ponens, a crucial concept in formal logic entailing that from premises of the form "If P, then Q" and "P is true," one can conclusively deduce "Q must be true."