One Problem with Real Business Cycle Theory Is That

question 18

Multiple Choice

One problem with real business cycle theory is that:

• A) it relies almost entirely on Keynes' original ideas, ignoring much of the progress made since then.
• B) it treats government officials as well- meaning public servants, despite much evidence to the contrary.
• C) its models downplay the importance of technological progress in the economy.
• D) it defines "productivity" in a new and not very intuitive way.
• E) it is more successful in explaining expansions than in explaining contractions.

---

Definitions:

Behaviourism

A psychological approach that emphasizes the study of observable behaviors and the environmental determinants of behavior, often excluding subjective mental states.

Systematic Use

The organized or methodical application of techniques, methods, or processes to achieve specific goals.

Rewards

Benefits or compensations given in response to an individual's behavior or achievement, intended to reinforce certain behaviors or outcomes.

Chocolate Chips

Small pieces of chocolate used as an ingredient in various desserts, notably cookies and muffins.