The Real Business Cycle Theory Asserts That Changes in ________

question 310

Multiple Choice

The real business cycle theory asserts that changes in ________ lead to changes in ________.

• A) the quantity of money; real GDP
• B) technology; productivity
• C) animal spirits; real GDP
• D) consumption expenditure; real GDP

---

Definitions:

Implicit and Explicit Costs

Implicit costs are indirect, non-monetary expenses related to the use of resources owned by the business, while explicit costs are direct, monetary payments for resources not owned by the firm.

Accounting Profit

The financial gain calculated by subtracting total explicit costs from total revenue, representing the net income reported on a company's financial statements.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as rent, salaries, and materials.

Economic Profits

The disparity between the amount a business earns in total and the sum of its outright and inferred expenses.