Suppose Real Output Falls in the Aggregate Economy

question 5

Multiple Choice

Suppose real output falls in the aggregate economy. Which is correct?

• A) A real business cycle theorist thinks that there was a negative shock to total factor productivity, and that the government should therefore increase expenditures.
• B) A New Keynesian thinks that the output gap has fallen, and central bank's interest rate target should rise.
• C) A real business cycle theorist thinks that total factor productivity has risen, and that the government should do nothing .
• D) none of the above.

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Definitions:

Stress Management

Techniques and therapies aimed at controlling a person's levels of stress, especially chronic stress, for the purpose of improving everyday functioning.

Healthy Lifestyles

Consist of practices and behaviors that promote physical, mental, and social well-being, such as regular exercise, balanced diet, and stress management.

Carcinogenic Cotton Dust

Cotton dust containing substances known to cause cancer, posing a health risk to workers in industries where cotton is processed.

Recordkeeping Requirement

Regulations or guidelines stipulating the type, format, and duration records must be maintained by organizations.