An Important Critique of Real Business Cycle Theory Is That

question 34

Multiple Choice

An important critique of real business cycle theory is that during a recession,

• A) there is overutilization of labour and overutilization of the aggregate capital stock.
• B) there is underutilization of labour and underutilization of the aggregate capital stock.
• C) there is overutilization of labour and the wage rate is constant.
• D) there is underutilization of labour and the real wage decreases.
• E) there is underutilization of labour and total factor productivity increases.

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Definitions:

Lochner V. New York

A landmark U.S. Supreme Court case in 1905 that struck down a New York law setting limits on working hours, marking a significant moment in the relationship between labor laws and governmental regulation.

Fourteenth Amendment

An amendment to the U.S. Constitution, adopted in 1868, granting citizenship to all persons born or naturalized in the United States and guaranteeing all citizens equal protection of the laws.

Government Interference

Actions by government bodies that affect the operations of businesses, organizations, or individual freedoms, often viewed negatively by those who advocate for minimal governmental involvement.

Charles Beard

An influential American historian who proposed that the Constitution was designed to protect the economic interests of its framers.