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Explain What Is Meant by a Representative Agent

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Essay

Explain what is meant by a representative agent.Why do real business cycle models make this assumption? What is the problem with this assumption?


Definitions:

Catalogs

Publications or lists that systematically enumerate items, products, or materials, often including descriptions and prices, used for reference or sales purposes.

Global Migration

The movement of populations across countries and continents, involving the relocation of individuals or groups for reasons such as economic opportunities, conflict, or environmental factors.

Manufacturing Sector

The segment of the economy concerned with the production of goods in factories, involving processes like machining or assembly.

Commodity Prices

The market rates assigned to raw materials (such as oil, gold, and grains), which are traded on various exchanges and can fluctuate based on supply and demand forces.

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