Critics of the RBC Approach Argue That It's Hard to Find

question 44

Multiple Choice

Critics of the RBC approach argue that it's hard to find productivity shocks large enough to cause business cycles.What is the RBC counterargument to this criticism?

• A)Business cycles are always and everywhere a monetary phenomenon.
• B)Wars and military buildups could be considered productivity shocks.
• C)Business cycles could be caused by the accumulation of small productivity shocks.
• D)Business cycles are often caused by unobservable productivity shocks, which aren't apparent at the time they occur.

Understand the impact of reserve requirements on the banking system and the overall money supply.

Analyze the role and effects of monetary policy in economic situations, including crisis management.

Understand the concept and implications of bank runs on the financial system and the economy.

Comprehend the economic significance of liquidity and how it's affected by various financial instruments and policies.