A government policy that is consistent with real business cycle theory would be for
A) government to vary its spending in response to shocks to total factor productivity.
B) the monetary authority to expand and contract the nominal money supply in response to shocks to total factor productivity.
C) government to smooth out tax distortions over time.
D) government to vary its lump-sum tax collections in response to changes in total factor productivity.
C
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A positive externality causes
A) the marginal social benefit to be less than the marginal private cost of the last unit produced. B) the marginal private benefit to exceed the marginal social cost of the last unit produced. C) the marginal social benefit to exceed the marginal private cost of the last unit produced. D) the marginal social benefit to be equal to the marginal private cost of the last unit produced.
The 1980s were characterized by ________ monetary policy and ________ fiscal policy
A) tight; easy B) tight; tight C) easy; easy D) easy; tight