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:

Communist

A person who supports or believes in the principles of communism, a socio-economic ideology that advocates for the common ownership of the means of production and the absence of social classes.

People's Republic of China

A sovereign state in East Asia, established in 1949, governed by the Communist Party of China, with Beijing as its capital.

1949

The year 1949 marks a significant period in global history, witnessing the formation of the North Atlantic Treaty Organization (NATO) and the establishment of the People's Republic of China.

Context-dependent Memory

The theory that information learned in a particular situation or environment is better remembered when in that same situation or environment.