Which of the Following Is a Criticism of Real Business

question 309

Multiple Choice

Which of the following is a criticism of real business cycle theory?

• A) Real business cycle theory assumes that money wage rates are sticky.
• B) Real business cycle theory believes that productivity changes are caused by technology changes when in fact they are caused by changes in aggregate demand.
• C) Real business cycle theory fails to explain the phenomenon of economic growth.
• D) None of the above are criticisms of real business cycle theory.

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Definitions:

Low-Cost Financing

Financing obtained at a lower interest rate than the market rate, often through government subsidies or special programs.

Adjusted Subsidiary Value

An evaluation metric that adjusts the value of a subsidiary’s assets and liabilities to their fair market value.

Investment Account

An account held at a financial institution into which individuals deposit funds for the purpose of buying securities and other investment assets.

New Shares

Additional shares of stock issued by a company to raise capital or in connection with a stock split.