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:

Production

The act of blending various tangible and intangible inputs, including designs and know-how, to create an end product for use.

Oligopolists

Firms within a market structure where a small number of companies have significant market control.

Collude

To cooperate secretly or illegally with others, typically to deceive or gain an unfair advantage.

Zero Profits

a situation where a firm's total revenues are exactly equal to its total costs, typically occurring in perfectly competitive markets in the long run.