An Important Critique of Real Business Cycle Theory Is That

question 32

Multiple Choice

An important critique of real business cycle theory is that during a recession

• A)there is underutilization of labour and the real wage decreases.
• B)there is overutilization of labour and overutilization of the aggregate capital stock.
• C)there is overutilization of labour and the wage rate is constant.
• D)there is underutilization of labour and total factor productivity increases.
• E)there is underutilization of labour and underutilization of the aggregate capital stock.

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