Critics of the RBC Approach Argue That It's Hard to Find

question 44

Multiple Choice

Critics of the RBC approach argue that it's hard to find productivity shocks large enough to cause business cycles.What is the RBC counterargument to this criticism?

• A)Business cycles are always and everywhere a monetary phenomenon.
• B)Wars and military buildups could be considered productivity shocks.
• C)Business cycles could be caused by the accumulation of small productivity shocks.
• D)Business cycles are often caused by unobservable productivity shocks, which aren't apparent at the time they occur.

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Definitions:

Temperate Deciduous Forests

Biomes characterized by four distinct seasons and deciduous trees which lose their leaves annually.

Growing Season

The period of the year during which climatic conditions are suitable for plants to grow.

Topsoil Horizon

The uppermost layer of soil, which contains organic material, minerals, and is crucial for plant growth.

Permafrost

Permanently frozen ground, usually occurring in the tundra, a biome of Arctic regions.