How do RBC theorists answer the objection that there have been few examples of large and easily measurable real shocks to the U.S. economy in recent decades?
What will be an ideal response?
Computer simulations of RBC statistical models have shown that frequent, small, randomly generated productivity shocks can produce large business cycle fluctuations. Therefore large business cycle fluctuations occur even in the absence of large productivity shocks.
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Fill in the blank: Other things constant, the introduction of generic (non-brand name) drugs on the market tends to ________ the price elasticity of demand for brand name drugs
A) increase B) decrease C) leave unchanged D) alter for the better
Although the pegged exchange rate between the yuan and the dollar has ________ the yuan, China had been reluctant to abandon the peg for fear that abandoning the peg would ________
A) overvalued; reduce exports B) undervalued; reduce imports C) overvalued; increase imports D) undervalued; reduce exports
The law of demand
A) was passed by the 102nd U.S. Congress. B) is a natural law, much like the law of gravity. C) is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic. D) is considered a "law" in economics in order to force economic models to operate fully.
Employers can shift payroll taxes by substituting capital for labor
a. True b. False Indicate whether the statement is true or false