According to Real Business Cycle Theory

question 29

Multiple Choice

According to real business cycle theory

• A) monetary policy is driving business cycles.
• B) Federal Reserve actions need to be watched closely.
• C) technology shocks have a major role in business cycles.
• D) cash-in-advance is necessarily to explain business cycles.

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Definitions:

Opportunity Cost

The cost of the next best alternative foregone as a result of making a decision.

Incremental Revenue

Additional income generated from a new sale, project, or strategy, over and above existing revenue streams.

Incremental Costs

Costs that change as a result of a new decision or alternative action, also known as marginal costs.

Incremental Costs

Incremental costs are the additional costs incurred when a business increases its level of operations or production.