RBC Models Are Said to Reproduce Some Important Relationships Between

question 37

Multiple Choice

RBC models are said to reproduce some important relationships between variables over the U.S.business cycle. Identify one such relationship from the given options.​

• A)​Output growth is closely related to growth in investment expenditure over the business cycle.
• B)​Over the course of the business cycle, consumption spending on physical capital grow less than the investment spending on physical capital.
• C)​Over the course of the business cycle, consumption spending on physical capital grow more than the investment spending on physical capital.
• D)​Output growth is closely related to growth in labor hours over the business cycle.

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Definitions:

Arousal Stage

A phase in psychological and physiological response that involves increased alertness, energy, and readiness for action.

General Adaptation Syndrome

A model describing the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Adrenal Glands

A pair of endocrine glands that release hormones that prepare the body for emergencies and stressful situations and also release corticoids and small amounts of the sex hormones.

Pituitary Gland

The endocrine gland located in the brain that releases hormones that activate other endocrine glands as well as growth hormone; often called the “master gland.”