Critics of the real business cycle theory claim that
A)both real and nominal variables change during the business cycle.
B)changes in technology cannot cause economic growth.
C)the intertemporal substitution effect is too weak to account for changes in labour supply.
D)Both answers B and C are correct.

Question

Quizplus · Accepted Answer

Critics argue that the intertemporal substitution effect, which suggests people change their labor supply based on real wage changes over time, is too weak to explain significant changes in labor supply during business cycles.

Critics of the Real Business Cycle Theory Claim That