According to the Real Business Cycle Theory, a Decrease in Labor

question 22

Multiple Choice

According to the real business cycle theory, a decrease in labor productivity will

• A)increase both prices and output
• B) decrease both prices and output
• C) increase prices and decrease output
• D)decrease prices and increase output
• E)have no effect on prices or output

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Definitions:

Japanese Yen

The official currency of Japan, often represented by the symbol ¥.

Risk Averse

A risk-averse individual prefers certainty over uncertainty and would opt for a guaranteed outcome over a gamble with potentially higher, yet uncertain, rewards.

Expected Rate

Often refers to the anticipated rate of return on an investment or the expected growth rate of an economic variable.

Risk-Averse Investor

An individual who prefers lower returns with known risks rather than higher returns with unknown risks.