According to the random walk of GDP model, when trying to investigate business cycles, it is very important to
A)know whether people's expectations are rational or adaptive
B)assume that markets do not clear rapidly
C)realize that markets are imperfectly competitive
D)use the right trend model when trying to identify shocks
E)know the impact of changes in stock values on the level of consumption

Question

Quizplus · Accepted Answer

The random walk model of GDP emphasizes the importance of identifying shocks to the economy correctly, which requires using the right trend model to distinguish between normal fluctuations and actual economic shocks.

According to the Random Walk of GDP Model, When Trying