In a Real Business Cycle (RBC) Model

question 11

Multiple Choice

In a real business cycle (RBC) model,

• A)agents are heterogeneous.
• B)agents do not have rational expectations.
• C)economic growth and business cycles are explained by two different variables.
• D)shocks to productivity are the sole source of the business cycle.

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Definitions:

Control Variance

The difference between expected performance standards and actual performance, used for budget and performance evaluation.

Productive Capacity

Refers to the maximum output or productive ability of resources, facilities, or organizations, emphasizing efficiency and optimization.

Contribution Margin

The contribution margin is the difference between total sales revenue and total variable costs, indicating how much revenue contributes towards covering fixed costs and profit generation.

Underutilising

Refers to the scenario where resources are not being used to their full potential or capacity, often leading to inefficiency or wastage.