This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks ... (Read 172 times)

mia

  • Hero Member
  • *****
  • Posts: 564
on: Jun 30, 2018
What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks come from?
 
  What will be an ideal response?

Question 2

Distinguish between investment goods and consumption goods. If you buy a car, is it investment or consumption? What if IBM buys a car? Are inventories a consumption or investment good?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

nekcihc358

  • Sr. Member
  • ****
  • Posts: 327
Reply #1 on: Jun 30, 2018
Answer to Question 1

In the Real Business Cycle Theory, changes in output are driven by changes in technology, which change aggregate supply. The changes in technology can be driven by new inventions, natural disasters, changes in the public's preferences for work, discoveries of natural resources, or government regulations and taxation which affect both firm's and worker's incentives to produce.

Answer to Question 2

Investment goods include the purchase of capital by firms and the purchases of homes by households. A car purchased by an individual is consumption, a car purchased by IBM is an investment good. Inventories are counted as an investment good.


mia

  • Member
  • Posts: 564
Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

zacnyjessica

  • Member
  • Posts: 345
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Glaucoma is a leading cause of blindness. As of yet, there is no cure. Everyone is at risk, and there may be no warning signs. It is six to eight times more common in African Americans than in whites. The best and most effective way to detect glaucoma is to receive a dilated eye examination.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Citric Acid Cycle Citric Acid Cycle
A model of the E. coli glutaminyl tRNA synthetase coupled with its tRNA and ATP A model of the E. coli glutaminyl tRNA synthetase coupled with its tRNA and ATP
Math Joke: Be Rational, Get Real Math Joke: Be Rational, Get Real
Marketing: Real People, Real Choices Marketing: Real People, Real Choices
State the transformations on the function f(x)= 4sin(x-pi)-2 and then graph two cycles below. State the transformations on the function f(x)= 4sin(x-pi)-2 and then graph two cycles below.
Business mathematics Business mathematics
Video: Neuron structure and function - sensory neurons, association neurons & motor neurons

For a complete list of videos, visit our video library