The Real Business Cycle Model Begins with the Assumption That

question 54

Multiple Choice

The real business cycle model begins with the assumption that ________.

• A)wages and prices are sticky
• B)wages and prices are completely flexible
• C)the velocity of money is a constant
• D)nominal variables are superior to real variables in describing economic activity

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Definitions:

Allowances

The intentional difference between the maximum material limits of mating parts to ensure a certain type of fit.

Tolerances

The permissible limits or variations in dimensions, properties, or conditions of an object or system, allowing for proper function without exact precision.

Tightness

The quality or state of being fixed or secure, often referring to the absence of unwanted movement between parts.

Looseness

The state or condition of being not tightly fixed or securely attached, leading to undesired movement.