Critics of the Real Business Cycle Theory Find It Difficult

question 49

Multiple Choice

Critics of the real business cycle theory find it difficult to understand:

• A) why the unemployment rate is always high.
• B) what makes potential output change over time.
• C) why technological changes affect labor productivity.
• D) how adverse changes in technology are so frequent.

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Definitions:

Marginal Disutility

The additional dissatisfaction or negative utility a person receives from consuming one more unit of a good or service.

Successive Unit

The next unit or piece in a series or sequence, often used in the context of production or consumption.

Framing Effect

The cognitive bias where people's decisions are influenced by the way information is presented rather than the information itself.

Relatively Cheap

A term used to describe goods or services that are considered to be priced lower than their perceived value or compared to alternative options.