The Real Business Cycle Theory Asserts That

question 43

Multiple Choice

The real business cycle theory asserts that

• A)markets clear fairly rapidly but fluctuations in output occur because of a variety of real shocks that can hit the economy
• B)misguided monetary policy is the main contributor to business cycles
• C)markets cannot clear easily since wages and prices are not very flexible
• D)business cycles occur because firms have incomplete information about relative and absolute prices
• E)firms tend to pay higher than market-clearing wages even at times of high unemployment

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Definitions:

Accrued Revenues

Revenues for services performed but not yet received in cash or recorded.

Received

Typically refers to the acknowledgement of having gotten something, such as goods or payments, within a business context.

Recognized

In accounting, recognized refers to the formal acknowledgment in financial statements that a transaction or event has impacted the entity's financial position or performance.

Book Value

The net value of a company's assets as found on its balance sheet, and is calculated by subtracting liabilities from the value of assets.