In Real Business Cycle Models and New Classical Models

question 47

Multiple Choice

In real business cycle models and new classical models

• A)monetary factors are responsible for fluctuations in output and employment.
• B)changes in unemployment are involuntary.
• C)markets always clear.
• D)prices and wages are perfectly flexible.
• E)none of the above.

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Definitions:

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy, regulating banks, maintaining financial stability, and providing financial services.

Double Coincidence of Wants

A situation in barter economies where two parties each hold an item the other wants, making it possible for them to exchange these items directly.

100-percent-reserve Banking

A banking system in which banks are required to keep 100% of their deposits available as reserves, thus eliminating the possibility of bank runs.

Money Supply

The collective sum of money assets in an economy at a certain timeframe.