Real Business Cycle Theory Argues That the Primary Cause of Business

question 22

Multiple Choice

Real business cycle theory argues that the primary cause of business cycles is fluctuations in

• A)government spending.
• B)the importance of externalities.
• C)total factor productivity.
• D)preferences.
• E)monetary shocks.

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Definitions:

Purchase Discount

A deduction that a buyer receives on the invoice price of a purchase if the payment is made within a specified period.

Prepaid Freight

Costs paid in advance for the transportation of goods, often recorded as an asset on the balance sheet until the service is utilized.

Merchandise Inventory

Goods that a company holds with the intent to sell them as part of its primary operations.

Perpetual Inventory System

A method of inventory management where records are updated in real-time with every sale and restocking.