The Real Business Cycle Theory Holds That the Business Cycle

question 118

Multiple Choice

The real business cycle theory holds that the business cycle

• A) originates as a result of factors affecting aggregate supply.
• B) originates as a result of factors affecting aggregate demand.
• C) is the result of correctly anticipated policies.
• D) is the result of incorrectly anticipated policies.

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Definitions:

Contractual Agreement

A legally binding contract between two or more parties outlining terms and conditions of an agreement.

Par Value

The nominal value of a bond or stock as stated by the issuer, unrelated to its market value.

Cash Flows

The total amount of money being transferred into and out of a business, principally involving operating, investing, and financing activities.

Annuity

A financial product that pays out a fixed stream of payments to an individual, often used as an income stream for retirees.