Which of the following is not assumed in Real Business Cycle theory?
a) labor supply curves are relatively flat
b) markets allocate resources efficiently
c) economic expansions are caused by technological improvements
d) recessions are caused by reductions in aggregate demand
e) the marginal product of labor changes over the course of the business cycle
d) recessions are caused by reductions in aggregate demand
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Several firms in an industry laid off their workers. Assuming all else equal, this will lead to a ________
A) higher rate of output in the industry B) higher rate of capacity utilization in the industry C) lower rate of capacity utilization in the industry D) higher real wage in the industry
A decision or a choice that is made after using optimization analysis:
A) has zero opportunity cost. B) is not necessarily risk free. C) is the same for all individuals. D) cannot be justified using normative analysis.
From 8 P.M. to 10 P.M., Susan can attend a movie, study, or talk with friends. Suppose that Susan decides to go to the movie but thinks that, if she hadn't, she would otherwise have talked with friends
The opportunity cost of attending the movie is A) talking with friends and studying. B) studying. C) talking with friends. D) two hours of time.
Due to their belief in interest rate flexibility, the classical economists argued that saving is matched by an equal amount of investment
Indicate whether the statement is true or false