According to real business cycle theorists,
A) fiscal policy explains most changes in output.
B) price and wage rigidity explain most changes in output.
C) efficiency wage theory explains wage rigidity.
D) changes in output primarily represent changes in the natural level of output.
E) fiscal policy explains most changes in efficiency wage theory.
D
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What are the components of fiscal policy? Explain how fiscal policy affects aggregate demand
What will be an ideal response?
Which of the following is the best example of the substitution effect?
a. Joe buys fewer apples and more oranges as the result of an increase in the price of apples. b. Joe buys more apples when his income increases. c. Joe buys an apple slicer when the price of apples decreases. d. Joe buys less sugar as the result of an increase in price of apples.
Which of the following will tend to decrease the excess reserves of the commercial banking system? a. The central bank buys bonds from the public
b. The central bank sells bonds to a commercial bank. c. The central bank reduces its discount rate. d. The central bank decreases the required reserve ratio.
The government can fight inflation by manipulating both aggregate demand and aggregate supply
a. True b. False Indicate whether the statement is true or false