A Criticism of the Real Business Cycle RBC) Theory Is

question 197

Multiple Choice

A criticism of the real business cycle RBC) theory is that

• A) productivity fluctuations might be caused by the business cycle.
• B) the money wage rate is flexible.
• C) potential GDP does not vary with changes in the quantity of money.
• D) All of the above answers are correct.

---

Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, represented as an expense on the income statement.

Market Rate

The current price or interest rate at which securities, commodities, or currencies can be bought or sold in a marketplace.

Contract Rate

The contract rate is the interest rate specified in a contract, especially in lending agreements or bond issuances, dictating the interest payments to be made.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock, representing its worth at issuance.