According to Mainstream Business Cycle Theory, _______ Grows at a Steady

question 45

Multiple Choice

According to mainstream business cycle theory, _______ grows at a steady rate and _______ grows at a fluctuating rate.

• A)aggregate demand; long- run aggregate supply
• B)potential GDP; short- run aggregate supply
• C)short- run aggregate supply; long- run aggregate supply
• D)short- run aggregate supply; aggregate demand
• E)potential GDP; aggregate demand

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Definitions:

Present Value

The valuation of an expected income stream determined by discounting the future income to the present using a discount rate.

Income Stream

A regular flow of money from an investment, property, or other financial assets.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the real cost of borrowing or the real yield on savings.

Perfect Substitute

Two or more goods that can be used interchangeably with no loss of utility by the consumer.