According to the Real Business Cycle Theory, an Increase in the Price

question 242

Multiple Choice

According to the real business cycle theory, an increase in the price of a resource, such as oil, that decreases the demand for loanable funds will _________employment and_________ real GDP.

• A) decrease; increase
• B) increase; decrease
• C) decrease; decrease
• D) increase; increase

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Definitions:

LRMC

Long-Run Marginal Cost, which refers to the change in total production costs that comes from producing one additional unit of a good or service when all inputs are variable.

SRMC

Short-Run Marginal Cost (SRMC) is the cost to produce one additional unit of output when some inputs are fixed.

Grocery Store

A retail establishment that sells food and other household items.

Traffic

The movement of vehicles or people through roads, airways, or any pathway, often used to describe the congestion or flow in transport systems.