Economics

Question 1

What is Real Business Cycle Theory?

Answer 1

It derives from applying utility theory and budget constraints to macroeconomic models. It is associated with the New Classical School.

Question 2

Central Banks are said to be independent if

Answer 2

Policy rate and method of computing inflation rate can be determined by them.

Question 3

Central banks have credibility if

Answer 3

economic actors come to believe inflation rate will be near the central bank’s target and factor this inflation rate into their decisions.

Question 4

(X-M)=

Answer 4

(S-I)-(G-T)

Question 5

Increase in money supply causes

Answer 5

lower interest rate and increase in demand.

Question 6

What is unemployment rate?

Answer 6

Unemployed/ labor force

Question 7

How Weighted average number of shares can be determined?

Answer 7

By weighted average of shares. However splits are considered to be occurred at the beginning of the year.