Author Question: In the real business cycle model, fluctuations in employment are explained by ________. A) ... (Read 40 times)

JMatthes · **on:** Jun 30, 2018

In the real business cycle model, fluctuations in employment are explained by ________.

A) changes in the composition of household assets
B) intertemporal substitution as real wages and real interest rates changes
C) changes in the marginal propensity to consume
D) the impact of a change in price on quantity demand and quantity supplied in goods markets

Question 2

To support the argument for an active role for government in stabilizing the economy, it must be true that

A) consumers are not rational and that not all wages and prices are flexible.
B) not all wages and prices are flexible and that government must be able to react quickly enough.
C) government must be able to react quickly enough and that shocks to the economy be primarily due to aggregate supply shocks.
D) shocks to the economy be primarily due to aggregate supply shocks and that consumers are not rational.