The real business cycle model focuses on how
A) the labor theory of value is the best measure of value of a good or service.
B) productivity shocks explain fluctuations in real GDP.
C) wage and price stickiness explains fluctuations in real GDP.
D) the Federal Reserve should adopt a monetary growth rule.
B
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A shoe salesman working on commission must decide whether to work hard or shirk. Working hard would increase the probability of a sale from 20% to 70% but would cost him $5 . If the average price of shoes is $100, what is the minimum commission rate would induce him to work hard?
a. 4% b. 6% c. 8% d. 10%
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.