Real Business Cycle Theory States That the Most Important Cause

question 23

Multiple Choice

Real business cycle theory states that the most important cause of business cycles is

• A)shocks to the money supply.
• B)interest rate shocks.
• C)Federal Reserve policy decisions.
• D)shocks to tastes and technology.

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Definitions:

Capitalist

An economic system characterized by private or corporate ownership of capital goods, investments determined by private decision, and prices, production, and the distribution of goods determined mainly by competition in a free market.

Socialist Economies

Economic systems based on collective or governmental ownership of the means of production and distribution of goods, where allocation is based on equality or need.

Economic System

A framework that defines how economic activities, including production, distribution, and consumption of goods and services, are organized and governed within a society.

Basic Economic Questions

Fundamental questions every economy must answer regarding what to produce, how to produce it, and for whom it is produced.