According to real business cycle theory,
A. monetary factors affecting aggregate demand cause macroeconomic instability.
B. when real wages fall during recessions, "real" unemployment rates rise.
C. recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand.
D. the net long-run costs of business fluctuations are severe.
Answer: C
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Refer to Figure 7.1. In equilibrium, the real wage is ________ and the amount of labor employed is ________
A) Y; B B) X; C C) Y; C D) Z; C
A nation has a comparative advantage in a good when it has a
A) higher opportunity cost of producing the good. B) tariff in place protecting the producers of the good. C) higher absolute cost of producing the good. D) lower absolute cost of producing the good. E) lower opportunity cost of producing the good.
An outward shift of the production possibilities curve represents
A) economic contraction. B) economic growth. C) economic recession. D) economic inflation.
The monopolist chooses to produce:
A. at a higher quantity than the perfectly competitive firm. B. where marginal cost equals marginal revenue. C. at an efficient outcome. D. at a cost that is equal to a competitive one.