An important critique of real business cycle theory is the belief that cyclical movements in total factor productivity
A)are too small to account for the size of fluctuations in real GDP.
B)does not explain the overall fluctuations in the business cycle.
C)may, in part, be an artifact of measurement error.
D)rarely occur.
E)lead to imperceptible changes in labour demand.

Question

Quizplus · Accepted Answer

The critique of real business cycle theory is that cyclical movements in total factor productivity may be an artifact of measurement error, and therefore, may not accurately reflect changes in the real economy.

An Important Critique of Real Business Cycle Theory Is the Belief