According to the Real Business Cycle Theory, Which of the Following

question 316

Multiple Choice

According to the real business cycle theory, which of the following is a TRUE statement about the effects of an oil shock in the 1970s?

• A) The shock affected real variables only and did not affect nominal variables.
• B) The shock shifted the short-run aggregate supply curve but not the long-run aggregate supply curve.
• C) The natural rate of unemployment remained unchanged, but employment levels did decline.
• D) Relative prices changed but there was no impact on the price level in general.

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Definitions:

Organic Product

Substances that result from organic chemistry reactions, often characterized by their carbon-based structure.

Major

Often used to describe the primary or most abundant product or outcome in a chemical reaction or process.

Stereochemistry

A branch of chemistry focused on the study of the spatial arrangements of atoms in molecules and their effects on chemical reactions.

Organic Product

A compound or material derived from living organisms or produced by reactions involving organic compounds.