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Real Business Cycle Theorists Believe That the Key to Understanding

Question 15

Multiple Choice

Real business cycle theorists believe that the key to understanding business cycles is


A) the need to understand the determinants of nominal aggregate demand.
B) the need to understand the division of changes in nominal aggregate demand into changes in production . (and employment) and changes in prices (inflation or deflation) .
C) that the same theory that determines what happens in the long run should also be applied to explain fluctuations in the short run.
D) the need to understand the velocity of money, the determinants of investment spending, the multiplier, . crowding out, the natural rate of unemployment, the rate of expected inflation, and the Phillips curve.

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