A Government Policy That Is Consistent with Real Business Cycle

question 16

Multiple Choice

A government policy that is consistent with real business cycle theory would be for

• A) government to vary its spending in response to shocks to total factor productivity.
• B) the monetary authority to expand and contract the nominal money supply in response to shocks to total factor productivity.
• C) government to smooth out tax distortions over time.
• D) government to vary its lump-sum tax collections in response to changes in total factor productivity.
• E) government to vary its spending and taxation decreases in response to shocks that affect the price level.

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Definitions:

HIV

Human Immunodeficiency Virus, a virus that attacks the immune system and can lead to acquired immunodeficiency syndrome (AIDS) if not treated.

Informal Education

Learning that occurs outside formal schooling through experiences, social interactions, and exploration, without a standardized curriculum.

Apprenticeship

Apprenticeship is a system of training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study (classroom work).

Shadowing

A method of learning or training in which a person closely follows and observes a professional at work to gain knowledge and understanding of a particular job or task.