One Problem with Real Business Cycle Theory Is That

question 9

Multiple Choice

One problem with real business cycle theory is that

• A)it is more successful in explaining expansions than in explaining contractions.
• B)it relies almost entirely on Keynes' original ideas, ignoring much of the progress made since then.
• C)it treats government officials as well-meaning public servants, despite much evidence to the contrary.
• D)it defines "productivity" in a new and not very intuitive way.
• E) its models downplay the importance of technological progress in the economy.

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Definitions:

Sunset

The time in the evening when the sun disappears below the horizon.

Leibniz

A German polymath and philosopher best known for his contributions to metaphysics, mathematics, and the development of the calculus independently of Isaac Newton.

Locke

An English philosopher and physician, widely regarded as one of the most influential of Enlightenment thinkers, particularly known for his theories of mind and personal identity.

Senses

Physiological capacities of organisms that provide data for perception, such as sight, hearing, smell, taste, and touch.