What is cyclical asymmetry?Multiple choice question.The aggregate demand for goods and services is more responsive to contractionary monetary policy than to expansionary monetary policy.Taxes increase more than transfer payments during an economic expansion.Transfer payments increase more than taxes during a recession.The aggregate demand for goods and services is more responsive to expansionary fiscal policy than to contractionary fiscal policy.Need help? Review these concept resources.
Question
What is cyclical asymmetry?Multiple choice question.The aggregate demand for goods and services is more responsive to contractionary monetary policy than to expansionary monetary policy.Taxes increase more than transfer payments during an economic expansion.Transfer payments increase more than taxes during a recession.The aggregate demand for goods and services is more responsive to expansionary fiscal policy than to contractionary fiscal policy.Need help? Review these concept resources.
Solution
Cyclical asymmetry refers to the phenomenon where the aggregate demand for goods and services is more responsive to one type of policy (either contractionary or expansionary) than the other. This can occur in both monetary and fiscal policy.
Looking at the options provided:
- The aggregate demand for goods and services is more responsive to contractionary monetary policy than to expansionary monetary policy.
- Taxes increase more than transfer payments during an economic expansion.
- Transfer payments increase more than taxes during a recession.
- The aggregate demand for goods and services is more responsive to expansionary fiscal policy than to contractionary fiscal policy.
Option 1 and 4 directly refer to the concept of cyclical asymmetry, as they discuss the differing responses of aggregate demand to different types of policies.
Option 2 and 3, on the other hand, discuss the changes in taxes and transfer payments during different economic conditions, which is not directly related to the concept of cyclical asymmetry.
Therefore, the correct answer would be either option 1 or 4, depending on the specific context and the exact definition of cyclical asymmetry being used.
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