Briefly compare and contrast the business cycle theory of Joseph Schumpeter and the real business cycle theory
Schumpeter believed that business cycles are caused by the effects of major technological breakthroughs in
the economy. These large innovations spawn other innovations and developments that combine to lead to
economic growth. In contrast, while real business cycle advocates agree that innovations lead to economic
growth, they assert that innovations are numerous and random.
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A decrease in the reserve requirement
A) decreases the money supply, which leads to decreased interest rates and a rise in investment spending. B) increases the money supply, which leads to increased interest rates and a fall in investment spending. C) increases the money supply, which leads to decreased interest rates and a rise in investment spending. D) decreases the money supply, which leads to increased interest rates and a fall in investment spending.
In the above figure, a movement from point A to point B represents
A) a decrease in the quantity of money demanded. B) a decrease in the demand for money that might be the result of a fall in the price level. C) an increase in the quantity of money demanded. D) an increase in the demand for money that might be the result of an increase in real GDP. E) an increase in the demand for money that might be the result of a fall in the price level.