Different Business Cycle Models

question 10

Multiple Choice

Different business cycle models

• A)support monetary policy but not fiscal policy.
• B)have contradictory implications for monetary and fiscal policy.
• C)have similar implications for monetary and fiscal policy.
• D)all imply that active government intervention is detrimental.
• E)all justify active government stabilization policy.

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Definitions:

Higher Principle

An overarching ethical or moral standard that guides decisions and actions, often prioritized over other considerations.

Charismatic Authority

Based on belief in the claims of extraordinary individuals to be inspired by God or some higher principle.

Legal-Rational Authority

Is typical of modern societies. It derives from respect for the law. Laws specify how one can achieve office. People generally believe these laws are rational. If someone achieves office by following these laws, people respect their authority.

Legitimately Accomplish

To achieve or complete something in a manner that is lawful, ethical, and recognized as proper and valid.