Intertemporal Substitution Tends to Amplify Business Cycles Because

question 99

Multiple Choice

Intertemporal substitution tends to amplify business cycles because:

• A) assets are typically worth more in booms than in recessions.
• B) the returns to work are higher in booms than in recessions,so people work more during booms and less during recessions.
• C) the returns to investment are higher when others are investing as well,thus we see more investment during booms and less during recessions.
• D) many people are hesitant to change jobs during recessions and thus resources are stuck in less productive uses.

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