Which of the following is correct? A general assumption in real business cycle models is that

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Quizplus · Accepted Answer

A general assumption in real business cycle models is that the economy is populated by a group of identical individuals. This is known as the representative agent assumption, which assumes that all individuals in the economy have the same preferences, abilities, and information. This allows for simplified modeling and analysis of macroeconomic phenomena, but may also limit the accuracy of the model's predictions. The other options are not necessarily assumptions in real business cycle models.

Which of the Following Is Correct? a General Assumption in Real