According to the Real Business Cycle Theory, Which of the Following

question 133

Multiple Choice

According to the real business cycle theory, which of the following is a true statement about the effects of an oil shock in the 1970s?

• A) The shock affected real variables only and did not affect nominal variables.
• B) The shock shifted the short-run aggregate supply curve but not the long-run aggregate supply curve.
• C) The natural rate of unemployment remained unchanged, but employment levels did decline.
• D) Relative prices changed but there was no impact on the price level in general.

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Definitions:

Robust

Referring to a system or model's ability to effectively operate or provide accurate results under varying conditions or assumptions.

Randomized Design

An experimental design in which subjects are randomly allocated to different groups to ensure that each has an equal chance of receiving any of the treatments.

Population Variances

The variances of different populations, measuring the dispersion of a set of values relative to their mean.

Equal-Variances T-Test

A statistical test comparing the means of two independent samples, based on the assumption that both groups have similar variances.