Real business cycle proponents argue that

Question

Quizplus · Accepted Answer

Real business cycle theory suggests that fluctuations in employment and economic output are primarily due to real (not nominal) shocks, such as changes in technology or available resources. It posits that changes in the real wage affect employment levels (A), assumes that labor markets clear so that everyone who wants a job at the current wage can find one (B), and suggests that during recessions, some individuals may choose not to work due to lower real wages or productivity levels (C). Therefore, all of the provided statements are consistent with real business cycle theory.

Real Business Cycle Proponents Argue That