Collateral Shocks Tend to Amplify Business Cycles Because

question 9

Multiple Choice

Collateral shocks tend to amplify business cycles because:

• A) assets are typically worth more in booms than in recessions and the value of assets tends to be positively correlated to firms' ability to obtain investment funding.
• B) the returns to work are higher in booms than in recessions,so people work more during booms and less during recessions.
• C) the returns to investment are higher when others are investing as well;thus we see more investment during booms and less during recessions.
• D) the uncertainty of recessions tends to increase people's job search time,while greater certainty decreases search time during booms.

Calculate probabilities using both the binomial formula and approximations like the Poisson approximation.

Analyze and interpret the results within the context of real-world scenarios.

Understand the application of statistical theories such as Tchebysheff's Theorem and the Empirical Rule.

Understand the criteria for a variable to have an approximate binomial distribution.

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Definitions:

Predict

To declare or indicate in advance; especially : foretell on the basis of observation, experience, or scientific reason.

Following

In the context of a sequence or process, it refers to something that comes after or as a result of another thing.

Reaction Mechanism

The step-by-step sequence of elementary reactions by which overall chemical change occurs, detailing the specific way in which atoms or groups of atoms move and bonds are formed or broken.

Detail

An individual feature, fact, or item that is considered significant and provides information or contributes to an overall understanding of a subject.