How Do RBC Economists Face the Business Cycle Fact That

question 71

Multiple Choice

How do RBC economists face the business cycle fact that inflation is procyclical?

• A)They argue that even though inflation doesn't fit their theory, everything else does, and inflation is not important.
• B)They note that inflation would not be procyclical if monetary policy were conducted properly.
• C)They argue that inflation is procyclical only because monetary policy shocks are the main cause of business cycles.
• D)They use alternative statistical methods that suggest that inflation is countercyclical.

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Definitions:

Iconic

Describing something or someone as highly recognizable, widely known, and regarded as a symbol of a particular era, genre, or field.

Explicit Memories

Memories that can be consciously recalled, such as facts and events, part of declarative memory.

Effortful Processing

Effortful processing is a type of memory encoding that requires awareness, attention, and effort to encode information.

Classical Conditioning

A learning process in which a neutral stimulus becomes associated with a meaningful stimulus and acquires the capacity to elicit similar responses.