The Flaw of the Real Business Cycle Model Is That

question 8

Multiple Choice

The flaw of the Real Business Cycle model is that it

• A)assumes away output fluctuations.
• B)assumes complete wage rigidity.
• C)assumes unrealistic fooling of workers.
• D)requires procyclical wage movements and continuous labor market equilibrium.

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Definitions:

Consumption Habits

The patterns or behaviors of individuals or groups in purchasing and using goods and services.

Dumping

Selling goods in a foreign market at a price below their cost of production or below the price in the domestic market.

Comparative Advantage

The principle that a country, individual, or company has over another in producing a particular good or service at a lower opportunity cost, allowing for beneficial trade and specialization.

Industrial North

The region in a country, historically in the United States, known for its heavy industry and manufacturing, contrasting with the agrarian South.