According to the real business cycle theory, which of the following is a TRUE statement about the effects of an oil shock in the 1970s?
A) Relative prices changed but there was no impact on the price level in general.
B) The natural rate of unemployment remained unchanged, but employment levels did decline.
C) The shock shifted the short-run aggregate supply curve but not the long-run aggregate supply curve.
D) The shock affected real variables only and did not affect nominal variables.
B
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The abbreviation GATT stands for:
a. General Analysis of Taxes and Transfers. b. General Agreement on Tariffs and Trade. c. Government Agency for Trade and Transportation. d. Government Agency for Treaties and Taxes. e. General Agreement on Terms of Trade.
One reason why nations trade is because
a. trading provides opportunities to earn profits. b. the rate of interest is not the same in all countries. c. resources are not equally distributed to all nations. d. some nations like to build one thing while others like to build another.
The Keynesian model provided an explanation for
a. the prolonged unemployment of the 1930s. b. the double-digit inflation rates of the 1970s. c. the high unemployment rates of the 1970s. d. the high inflation rates of the 1930s.
Low labor standards are usually associated with
A) nondemocratic governments. B) high-income countries. C) high-wage countries. D) low foreign investment.