Which of the Following Is a Criticism of Real Business

question 39

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

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Definitions:

Markup

The difference between the cost of a good or service and its selling price, expressed as a percentage over the cost.

Physical Inventory

A method of inventory valuation that involves physically counting all the inventory items at a specific point in time to determine their total value.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund its day-to-day operations.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.