Empirical Work Designed to Investigate How Well Imperfect-Information Theory Explains

question 46

Multiple Choice

Empirical work designed to investigate how well imperfect-information theory explains real world divergence between actual and potential GDP has shown

• A) only that monetary changes precede employment and output fluctuations.
• B) the importance of other types of shocks in macroeconomic fluctuations.
• C) a strong correlation between price surprises and the GDP gap that provides impressive support for the theory.
• D) a and b only.
• E) none of the above because the data are so poor.

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Definitions:

Price Paid

Price paid refers to the actual amount of money exchanged for the acquisition of a good or service.

Tax

Tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive.

Tax

A required financial contribution or alternative type of tax enforced on a taxpayer by a governing body to support government expenditure and assorted public outlays.