Time Bunching Tends to Amplify Business Cycles Because

question 84

Multiple Choice

Time bunching tends to amplify business cycles because:

• A) assets are typically worth more in booms than in recessions.
• 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 tend to increase people's job search time,while greater certainty decreases search time during booms.

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Definitions:

Response Time

The amount of time it takes for a system or individual to react to a given stimulus or request.

Objective Function

A mathematical formula used in optimization to define the goal that needs to be achieved, usually involving minimization or maximization.

Nonsmooth Optimization

An area of optimization dealing with problems that do not have continuous derivatives, often involving abrupt changes.

Fixed-Cost Problem

An issue in budgeting or economics where costs do not change with the level of production or activity.