In Real Business Cycle Models, Business Cycles Exist Because of

question 173

Multiple Choice

In real business cycle models, business cycles exist because of

• A) repeated errors by Congress in timing policy changes.
• B) policy errors by the Fed.
• C) changes in technology.
• D) frequent changes in the public's labor supply.

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Definitions:

Shutdown Point

The level of operation at which a company does not benefit from continuing operations and may decide to temporary halt production—it's where marginal cost equals average variable cost.

Lowest Price

The minimum amount at which a product or service is sold, often determined by costs, competition, and market demand.

Long Run

A period in which all factors of production and costs are variable, allowing full adjustment to changes.

Firm's Profit

The financial gain achieved by a firm when its total revenues exceed its total expenses.