Which Theory of the Business Cycle Maintains That the Money

question 153

Multiple Choice

Which theory of the business cycle maintains that the money wage rate always adjusts freely?

• A)Keynesian cycle theory
• B)Real business cycle theory
• C)Monetarist cycle theory
• D)Both the new classical cycle theory and the new Keynesian cycle theory

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Definitions:

Inelastic Demand

A condition in market dynamics where the demand for a product does not significantly change with a change in the product's price.

Competitive Price-searcher

An economic term for a seller that sets its product prices based on what competitors are charging, within a competitive market environment.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Control Over Price

The ability of a person or organization to influence the price at which goods or services are sold.