In the Real Business Cycle Model, the Quantity of Money

question 278

Multiple Choice

In the real business cycle model, the quantity of money

• A) has no effect on real GDP.
• B) can change the real wage rate.
• C) can decrease the effect from technology shocks.
• D) can increase the real interest rate.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows, guiding investment and financing decisions by reflecting the opportunity cost of capital.

NPV

An abbreviation for Net Present Value, it assesses the worth of future cash flows in today's dollars, subtracting the initial investment.

PI

A mathematical constant representing the ratio of a circle's circumference to its diameter, approximately 3.14159.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment.