The Basic Real Business Cycle Model Has Some Difficulty Explaining

question 15

Multiple Choice

The basic real business cycle model has some difficulty explaining why

• A) consumption is procyclical.
• B) investment is procyclical.
• C) the price level is countercyclical.
• D) the money supply is procyclical.
• E) the real wage is procyclical.

---

Definitions:

Holiday Lighting

The practice of installing lights and other decorative lighting during holidays; not inherently economic but can involve significant expenditure and economic activity.

Negative Externalities

Costs suffered by a third party as a result of an economic transaction.

Government Tax

is a compulsory financial charge or levy imposed by a government on individuals or corporations to fund public expenditures.

Allocation of Resources

The process of distributing available resources among various uses or projects in an effort to achieve strategic goals and efficiency.