Which of the following is NOT a transmission mechanism of real shocks and aggregate demand shocks?
A) reversible investment
B) intertemporal substitutions
C) collateral damage
D) time bunching

Question

Quizplus · Accepted Answer

Reversible investment is not a transmission mechanism of real shocks or aggregate demand shocks. The other three options are transmission mechanisms - intertemporal substitutions occur when consumers change their spending patterns over time, collateral damage refers to the spillover effects of shocks on unrelated sectors or regions, and time bunching describes the concentration of economic activity in certain periods due to, for example, tax incentives or seasonality.

Which of the Following Is NOT a Transmission Mechanism of Real