Which of the Following Pieces of Evidence Is Most Consistent

question 293

Multiple Choice

Which of the following pieces of evidence is most consistent with the real business cycle theory?

• A) Labor supply decisions do not seem to depend on real interest rates.
• B) Real GDP and the quantity of money move closely together.
• C) Money wage rates take some time to adjust to price changes.
• D) Productivity and GDP move closely together.

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Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months.

Political Incentive

A reason or motivation based on political goals or outcomes, influencing the actions of politicians or governments.

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States during the 1930s to help recover from the Great Depression.