According to the Real Business Cycle Theory, an Adverse Change

question 145

Multiple Choice

According to the real business cycle theory, an adverse change in technology:

• A) increases the productivity of labor, which causes real wages and output to increase.
• B) decreases the productivity of labor, which causes real wages and output to increase.
• C) decreases the productivity of labor, which causes real wages to fall and output to decline.
• D) increases the productivity of labor, which causes real wages and output to decline.

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Definitions:

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where demand equals supply.

Non-collusive Oligopolist

A firm in an oligopoly market structure that independently sets prices and output levels without secret agreements with competitors.

Marginal Cost

The increase in cost that comes from making one more unit of a product or service.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to a balance in the market.