Answer the following statements true (T) or false (F)

Question

1. In real-business-cycle theory, real output can change without a change in the price level.
2. A coordination failure is said to occur when people do not reach a mutually beneficial equilibrium because they lack some way to jointly coordinate their actions to achieve it.
3. New classical economists see the economy as incapable of self-correction when disturbed and pushed away from its full-employment level of real output.
4. Rational expectations theory assumes that both product and resource markets are competitive and that wages and prices are flexible.
5. In rational expectations theory, a fully anticipated change in aggregate demand or in the price level results in no change in real output.

Answer 1

1. T
2. T
3. F
4. T
5. T