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.
A
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Price equals the minimum of long-run average cost
A) in a long-run equilibrium. B) in a short-run equilibrium as well as in a long-run equilibrium. C) whenever average revenue equals marginal cost. D) along a horizontal long-run supply curve, but not along an upward sloping long-run supply curve.
According to the equation of exchange, if Real GDP is $3 trillion and the money supply is $0.5 trillion, then velocity
A) must be 6. B) must be 1/6. C) must be 4 trillion. D) must be 1/4 trillion. E) cannot be determined without knowing what the price level is.