Consider Two Alternative Worlds: (I)the World Works According the Real

question 27

Multiple Choice

Consider two alternative worlds: (i) the world works according the real business cycle model,and the central bank acts to stabilize the price level; (ii) the world works according to the New Keynesian sticky price model,and the central bank acts to make the output gap zero. Which is correct?

• A) We would prefer to live in world (ii).
• B) We would prefer to live in world (i).
• C) The data cannot tell us whether we are living in world (i) or world (ii).
• D) in either world, the central bank is irrelevant.

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Definitions:

Quality Design

The process of planning and executing the production of goods or services to meet specified quality standards and fulfill customer expectations.

Teamwork

The collaborative effort of a group to achieve a common goal or complete a task in the most effective and efficient way.

Centralized Decision Making

A decision-making structure where major decisions are made by a small group of individuals or a single person at the top of the organizational hierarchy.

Motivating

The process of stimulating individuals or groups to act in a way that achieves a desired outcome or goal.