Real Business Cycle Theory Explains Fluctuations in Output Through

question 6

Multiple Choice

Real business cycle theory explains fluctuations in output through:

• A) changes in aggregate demand.
• B) changes in productivity.
• C) shifts of the short-run aggregate supply curve.
• D) changes in monetary policy.

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Definitions:

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, using the average of the initial and final quantities and prices to determine the percentage change.

Inelastic

Refers to a scenario in which the demand or supply for a product or service is relatively insensitive to price fluctuations.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a price change.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply between two points on a curve by using the average of the initial and final quantities and prices.