A business cycle fact that does NOT seem to be consistent with the simple RBC theory is that
A)inflation tends to slow during or immediately after a recession.
B)inflation tends to increase during or immediately after a recession.
C)inflation tends to remain the same during or immediately after an expansion.
D)inflation tends to slow during or immediately after an expansion.

Question

Quizplus · Accepted Answer

The simple Real Business Cycle (RBC) theory does not typically account for inflation dynamics, as it focuses on real shocks like technology changes. Inflation increasing during or immediately after a recession is inconsistent with RBC, which would expect inflation to slow due to reduced demand.

A Business Cycle Fact That Does NOT Seem to Be