The rate of growth in GDP affects agriculture
A) Has a major effect on agriculture because people need to eat.
B) Has a minimal effect on agriculture because more consumers eat away from home.
C) Has a major effect on agriculture because of the high income elasticity for agricultural products.
D) Has a minimal effect on agriculture because of the low income elasticity for agricultural products.
Answer: D
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Critics of the RBC approach argue that it's hard to find productivity shocks large enough to cause business cycles. What is the RBC counterargument to this criticism?
A) Business cycles are always and everywhere a monetary phenomenon. B) Wars and military buildups could be considered productivity shocks. C) Business cycles could be caused by the accumulation of small productivity shocks. D) Business cycles are often caused by unobservable productivity shocks, which aren't apparent at the time they occur.
If government spending rises but the central bank changes the money supply to prevent income from changing, then
a. both consumption and investment will remain unchanged. b. consumption rises and investment falls. c. investment falls but consumption rises. d. both consumption and investment rises.