In Real Business Cycle Models, in Order to Increase Real

question 134

Multiple Choice

In real business cycle models, in order to increase real GDP after a negative technology shock, the government can
I. increase the quantity of money.
II. decrease the quantity of money.

• A) only I
• B) only II
• C) both I and II
• D) neither I nor II

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Definitions:

Capital Budget

The process and plan for determining and allocating financial resources for major investments or projects within a company.

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, often expressed as a percentage.

Dividend Policies

The policies and guidelines a company follows in deciding how much of its earnings it will pay out to shareholders as dividends.

Bird-In-The Hand

A theory suggesting that investors prefer dividends from a stock to potential capital gains because of the immediate certainty of receiving payouts.