In the aggregate production function Y = A , real business cycle ...

[maegan_martin]

In the aggregate production function Y = A , real business cycle theory treats ________ as the key independent variable.
 
  A) potential output
  B) productivity
  C) the capital stock
  D) the labor input

Question 2

Under fiscal stabilization policy in the New Keynesian model, after a negative shock to output,
 
  A) the government increases expenditures and the central bank increases the money supply.
  B) the government increases expenditures and the central bank decreases the money supply.
  C) the government decreases expenditures and the central bank increases the money supply.
  D) the government decreases expenditures and the central bank decreases the money supply.

[jennafosdick]

Answer to Question 1

B

Answer to Question 2

A