Which of the Following Is Not Assumed in Real Business

question 26

Multiple Choice

Which of the following is not assumed in Real Business Cycle theory?

• A) labor supply curves are relatively flat
• B) markets allocate resources efficiently
• C) economic expansions are caused by technological improvements
• D) recessions are caused by reductions in aggregate demand
• E) the marginal product of labor changes over the course of the business cycle

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Definitions:

Compounded Monthly

Refers to the process of applying interest to an initial amount and any accumulated interest on a monthly basis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual or organization.

Effective Rate

is the interest rate on a loan or financial product, restated from the nominal rate as an annual rate that may incorporate compounding.