Which of the Following Is the Most Likely Cause of a Recession

question 15

Multiple Choice

Which of the following is the most likely cause of a recession according to the real business cycle model?

• A)an unanticipated change in the money supply.
• B)an increase in taxation,government spending,and regulation.
• C)a fall in expected profits.
• D)an anticipated change in the money supply.
• E)none of the above.

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Definitions:

Monetary Policy

The process by which a central bank controls the supply of money in the economy, primarily through interest rates.

Federal Reserve District Banks

The 12 regional banks in the Federal Reserve System, each serving a specific geographic area of the United States, responsible for implementing the country's monetary policies.

Recessions

A phase of limited economic decrease, with trade and industry activity lowering, usually identified by a decrease in GDP in two adjacent quarters.

Federal Reserve Notes

Paper money issued by the Federal Reserve, the central banking system of the United States, used as the country's standard currency.