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:

GATT

The General Agreement on Tariffs and Trade, an international treaty that aimed to reduce tariffs and other trade barriers; precursor to the World Trade Organization.

Economists

Experts in the study of economics, focusing on the distribution, consumption, and production of goods and services.

Net Exports

The value of a country's total exports minus its total imports; a positive value indicates a trade surplus, while a negative value indicates a trade deficit.

Gross Savings

The total amount of savings generated within an economy, including personal, business, and government savings, before accounting for depreciation.