According to the Real Business Cycle Theory,business Cycle Contractions Are

question 104

Multiple Choice

According to the real business cycle theory,business cycle contractions are generally caused by

• A) the self-interest of politicians.
• B) decreases in business investment.
• C) decreases in the growth rate of the money supply.
• D) decreases in the economy's capacity to produce.
• E) all of the above

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Definitions:

Rational Choice

A theory in economics that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Costs and Benefits

An analysis approach that compares the total costs and total benefits associated with a particular action or decision to determine its feasibility or worth.

Predictable Ways

Methods or patterns that can be anticipated or expected based on previous observations or known properties.

Incentives Matter

A principle that highlights the importance of rewards and penalties in influencing human behaviour and decisions in economics.