The Major Criticism of Real Business Cycle Models Is

question 87

Multiple Choice

The major criticism of real business cycle models is

• A)negative technology shocks are uncommon and can't explain all business cycle fluctuations.
• B)positive technology shocks actually push real GDP above the economy's potential GDP.
• C)negative technology shocks actually push real GDP below the economy's potential GDP
• D)this model relies too heavily on monetary explanations for fluctuations in real GDP.

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Definitions:

Spare Plant Capacity

The additional production capacity available in a facility that is not currently being used, allowing for increased output without significant new investment.

Operational Hours

The hours during which a business or service is operational and open to customers.

Capacity Management

The process of planning and controlling the resources needed to meet product demand while maximizing operational efficiency.

Subcontracting

This refers to the practice of assigning or outsourcing part of the obligations and tasks under a contract to another party known as a subcontractor.