How do RBC theorists answer the objection that there have been few examples of large and easily measurable real shocks to the U.S. economy in recent decades?

What will be an ideal response?

Computer simulations of RBC statistical models have shown that frequent, small, randomly generated productivity shocks can produce large business cycle fluctuations. Therefore large business cycle fluctuations occur even in the absence of large productivity shocks.

Economics

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If a good is scarce, does that imply that there is a shortage of it?

What will be an ideal response?

Economics

Suppose the market in Figure 9.4 is currently in equilibrium. If the government establishes a price floor of $50, how many widgets will be sold?

A) 20 B) 30 C) 40 D) 50 E) 60

Economics