According to Real-Business-Cycle Theory

question 200

Multiple Choice

According to real-business-cycle theory,

• A)monetary factors affecting aggregate demand cause macroeconomic instability.
• B)recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand.
• C)when real wages fall during recessions, "real" unemployment rates rise.
• D)the net long-run costs of business fluctuations are severe.

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Definitions:

Before-Tax Household Income

The total income earned by a household before any taxes are deducted.

Greater Inequality

Refers to an increase in the unequal distribution of resources, wealth, or opportunities within a society or between different societies.

Income Distribution

The way in which a nation’s total earnings are spread among its population, affecting economic inequality.

Total Income

The aggregate amount of money earned or received by an individual or entity from all sources before any deductions.