Multiple Choice
Intertemporal substitution tends to amplify business cycles because:
A) assets are typically worth more in booms than in recessions.
B) the returns to work are higher in booms than in recessions,so people work more during booms and less during recessions.
C) the returns to investment are higher when others are investing as well,thus we see more investment during booms and less during recessions.
D) many people are hesitant to change jobs during recessions and thus resources are stuck in less productive uses.
Correct Answer:
Verified
Correct Answer:
Verified
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