Real business cycle theory seeks to explain business cycle fluctuations by focusing on:
A. changes in monetary policy.
B. aggregate demand.
C. shifts in potential output.
D. the inflexibility of prices and wages.
Answer: C
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Refer to Figure 16.1. A decrease in the depreciation rate is best represented by a movement from
A) point A to point B. B) point B to point A. C) point A to point C. D) point C to point A.
The World Bank makes loans primarily to
A) nations without free markets, such as North Korea. B) developing nations. C) the United States. D) highly developed nations.
A way in which government can attempt to solve the problems caused by information asymmetry in the marketplace is:
A. screening. B. building a reputation. C. disclosure laws. D. statistical discrimination.
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, in the production range of 2 to 3 combs the opportunity cost of producing 1 more comb in terms of brushes is
A. 3.33. B. 0.67. C. 0.14. D. 7.0.