General Sources of Shocks That Can Cause Business Cycles Include

question 109

Multiple Choice

General sources of shocks that can cause business cycles include the following, except:

• A) Irregular occurrence of innovations and productivity changes
• B) Monetary factors and financial instability
• C) Unemployment jumps and production drops
• D) Political events, either domestic or global

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Definitions:

Economic Profits

Economic Profits are the profit made by a company after deducting both explicit and implicit costs, representing the true profitability of the company.

Long Run

a period in which all factors of production and costs are variable, allowing firms to adjust all inputs.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some degree of market power.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, equating to its opportunity costs.