Real Business Cycle Theory Contends That The

question 82

Multiple Choice

Real business cycle theory contends that the:

• A) aggregate supply curve is vertical, and it shifts to the left in a recession.
• B) aggregate demand curve is vertical, and it is the main factor that causes the business cycle.
• C) aggregate supply curve is horizontal, indicating that business cycles have been stabilized.
• D) aggregate demand curve is downward sloping, which shows that productivity growth is slowing down, causing the business cycle.

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Definitions:

Bakery

A place where bread, cakes, cookies, and other baked goods are made or sold.

Cannibalization

The decline in the number of units sold, income, or market control of a product following the release of a new product by the same company.

MR

Marginal Revenue, the change in total revenue that results from selling one additional unit of a product or service.

MC

The additional cost of producing one more unit of a product or service, known as marginal cost.