Critics of the Real Business Cycle Theory Claim That

question 76

Multiple Choice

Critics of the real business cycle theory claim that

• A) both real and nominal variables change during the business cycle.
• B) the intertemporal substitution effect is too weak to account for changes in labor supply.
• C) changes in technology cannot cause economic growth.
• D) Both answers B and C are correct.

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Definitions:

Roots

The part of a plant that attaches it to the ground or to a support, typically underground, conveying water and nourishment to the rest of the plant.

Stability

The quality of being resistant to change and capable of maintaining a constant condition or staying steady.

Discipline

Discipline involves the practice of training oneself or others to obey rules or a code of behavior, using punishment to correct disobedience or to cultivate a habit or skill.

Improve Communication

The process of enhancing the effectiveness and clarity of exchanging information between individuals or groups.