An Important Critique of Real Business Cycle Theory Is the Belief

question 50

Multiple Choice

An important critique of real business cycle theory is the belief that cyclical movements in total factor productivity

• A) rarely occur.
• B) may, in part, be an artifact of measurement error.
• C) lead to imperceptible changes in labour demand.
• D) are too small to account for the size of fluctuations in real GDP.
• E) does not explain the overall fluctuations in the business cycle.

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Definitions:

Motivation

The force that moves people to behave, think, and feel the way they do.

Self-perception Theory

A psychological theory suggesting that people develop their attitudes and opinions by observing their own behavior and concluding what attitudes must have caused it.

Psychological Discomfort

A mental state of unease which can stem from anxiety, stress, unfamiliarity, or situations that push one out of their comfort zone.

Attitudes

A settled way of thinking or feeling about someone or something, typically reflected in a person's behavior.