An countercyclical variable is one that:
A)moves the same direction as real GDP.
B)has little tendency to move during a business cycle.
C)moves the opposite direction as real GDP.
D)determined outside the model.

Question

Quizplus · Accepted Answer

A countercyclical variable moves in the opposite direction as real GDP, meaning it tends to increase during a recession and decrease during an expansion. Option A is incorrect because a variable that moves in the same direction as real GDP is procyclical. Option B is incorrect because a variable that has little tendency to move during a business cycle is acyclical. Option D is incorrect because a variable being determined outside the model does not necessarily determine its cyclical nature.

An Countercyclical Variable Is One That