Real Business Cycle Theory Argues That the Primary Cause of Business

question 69

Multiple Choice

Real business cycle theory argues that the primary cause of business cycles is fluctuations in

• A) preferences.
• B) government spending.
• C) the importance of externalities.
• D) total factor productivity.

---

Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.

Put Option

This contract permits a person to have the option, without being compelled, to sell a certain amount of a base asset at a fixed price within a designated timeframe.

Call Delta

Measures the sensitivity of an option's price to a change in the price of the underlying asset, reflecting how much the price of the option is expected to change for a small change in the asset price.