We Use a Two-Period Model Because

question 2

Multiple Choice

We use a two-period model because

• A) the business cycle has two phases: contraction and recovery.
• B) it is the simplest dynamic model.
• C) we want to make a distinction between young and old households.
• D) this is the horizon of the politicians that formulate policy.

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Definitions:

Credit Union

A member-owned financial cooperative that is created and operated by its members and provides credit at competitive rates as well as other financial services to its members.

Financial Institutions

Organizations such as banks, credit unions, and finance companies that provide a range of financial services including loans, deposits, and investments.

Real Assets

Physical or tangible assets that have intrinsic value, such as real estate, commodities, or natural resources.

Financial Intermediaries

Institutions that act as middlemen between savers and borrowers, including banks, credit unions, and insurance companies.