Critics of the Real Business Cycle Theory Claim That

question 76

Multiple Choice

Critics of the real business cycle theory claim that

• A) both real and nominal variables change during the business cycle.
• B) the intertemporal substitution effect is too weak to account for changes in labor supply.
• C) changes in technology cannot cause economic growth.
• D) Both answers B and C are correct.

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Definitions:

Musical Instruments

Devices constructed or used for the purpose of making musical sounds.

Substance P

A neuropeptide involved in pain perception and the inflammatory response within the body.

Endorphin

Natural peptides produced by the brain that act as neurotransmitters to reduce pain perception and lead to feelings of euphoria.

Serotonin

A neurotransmitter that contributes to feelings of well-being and happiness, also involved in the regulation of mood, sleep, and appetite.