Author Question: One problem with real business cycle theory is that A) it is more successful in explaining ... (Read 63 times)

Beheh · **on:** Jun 30, 2018

One problem with real business cycle theory is that

A) it is more successful in explaining expansions than in explaining contractions.
B) it relies almost entirely on Keynes' original ideas, ignoring much of the progress made since then.
C) it treats government officials as well-meaning public servants, despite much evidence to the contrary.
D) it defines productivity in a new and not very intuitive way.
E) its models downplay the importance of technological progress in the economy.

Question 2

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.