The Real-Business-Cycle Theory

question 84

Multiple Choice

The real-business-cycle theory

• A) is a monetarist view of the business cycle.
• B) is the mainstream view of the business cycle.
• C) assumes that the supply of money is constant.
• D) says that macro instability results from shifts in the long-run aggregate supply curve.

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Definitions:

Multiplication Rule

A principle in probability that determines the likelihood of two independent events occurring together by multiplying their individual probabilities.

Probability

The measure of the likelihood that an event will occur.

Posterior Probability

The revised probability of an event occurring after taking into consideration new information.

Prior Probability

The probability of an event before new data or information is taken into account.