Suppose That an Economist Finds That Real Interest Rates Are

question 108

Multiple Choice

Suppose that an economist finds that real interest rates are extremely high in most recession (which are times when employment is low) .. This finding would pose the biggest problem for the

• A) new classical theory of the business cycle.
• B) real business cycle theory.
• C) new Keynesian theory of the business cycle.
• D) Keynesian theory of the business cycle.

---

Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operations, with cost per unit of output generally decreasing with increasing scale.

Economies of Scale

The price benefits that firms enjoy from the magnitude of their operations, where the cost of each output unit generally lessens as the scale of operations increases.

Unit Costs

The financial outlay for a company to manufacture, warehouse, and dispose of one unit of a specific item or service.

Output

Represents the total amount of goods or services produced by a firm or economy in a specific period.