Suppose That the Business Cycle in Canada Is Best Described

question 11

Multiple Choice

Suppose that the business cycle in Canada is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The ________ the real interest rate, other things remaining the same, the ________ is the supply of labour today. RBC theorists believe the when-to-work effect is ________.

• A)lower; smaller; small
• B)higher; smaller; small
• C)higher; larger; large
• D)lower; larger; large
• E)higher; larger; small

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Definitions:

Expected Real Rate

The anticipated return on an investment after adjusting for inflation, representing the true growth of purchasing power.

Ownership

The legal right to possess, use, and dispose of anything ranging from physical goods to intellectual property.

Diverse Set

A collection characterized by a wide range of different elements, often referring to variety in demographics, ideas, or characteristics.

Standard & Poor's 500

An index tracking the performance of 500 major companies traded on U.S. stock exchanges.