In the Real-Business-Cycle Theory

question 82

Multiple Choice

In the real-business-cycle theory,

• A) declines in real output cause declines in the money supply and thus aggregate demand.
• B) decreases in long-run aggregate supply are fully anticipated and therefore do not reduce real output.
• C) technology is constant.
• D) economic instability results from inappropriate monetary policy.

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Definitions:

Attribution Theory

The view that people are motivated to discover the underlying causes of behavior as part of their effort to make sense of the behavior.

Self-Fulfilling Prophecy

A belief or expectation that influences behavior in a way that causes the belief to become true.

Stereotypes

Oversimplified generalized beliefs about a group of people that often do not accurately reflect reality, influencing attitudes and behaviors towards members of that group.

Beautiful Is Good

A social psychological phenomenon where physical attractiveness leads people to attribute other positive traits such as intelligence and kindness to the person.