Which of the Following Is Correct? a General Assumption in Real

question 36

Multiple Choice

Which of the following is correct? A general assumption in real business cycle models is that

• A)dissimilar individuals populate the economy.
• B)the labor market does not clear.
• C)the economy is populated by a group of identical individuals.
• D)the economy experiences involuntary unemployment.

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Definitions:

Consumer Substitution

The tendency of consumers to switch from one good to another in response to changes in relative prices, keeping their level of satisfaction or utility constant.

New Good

A product that has been recently developed or introduced to the market, offering new benefits or replacing existing goods.

Economic Well-Being

A measure of how well an individual, community, or country is performing economically, often considering factors like income, employment, and access to goods and services.

Variety

The range of different products, services, or choices available in a market, often contributing to consumer satisfaction and market efficiency.