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In ______ cycle theory, past rational expectations of the current price level influence the money wage rateand the position of the SAS curve. : new classical; new KeynesianAccording to RBC theory,the source of the business cycle is _______,which result mainly from _______.: fluctuations in productivity; fluctuations in the pace of technological changeAccording to RBC theory,the main source of economic fluctuations is a decrease in ______: productivity growthThe effect of this decrease is a decreasein investment demand, a decreasein the demand for loanable funds, and a decreasein the real interest rateThe effect of this decrease is a decreasein the demand for labor, a decreasein the supply of labor, a decreasein employment, and a decreasein the real wage rateThe main criticisms of RBC theory include all of the following except______.: real business cycle theory relies too heavily the role of money in the economy to make its predictionsDefenders of RBC theory claim all of the following except_______.: RBC theory is consistent with anegligible intertemporal substitution effectDebate on Causes of Joblessness Grows
What is the cause of the high unemployment rate? One side says there is not enough government spending. The other says it's a structural problemlong dash—people who can't move to take new jobs because they are tied down to burdensome mortgages or firms that can'tfind workers with the requisite skills to fill job openings.______ cycle theory would say that the rise in unemployment is not cyclical but is a change in the natural unemployment rate.: real businessSuppose the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium quantity of loanable funds and real interest rate. Label it 1. Draw a curve that shows the effect of the increase in productivity. Label it.Draw a point at the new equilibrium quantity of loanable funds and real interest rate. Label it 2. Suppose the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity.Draw a demand curve for labor. Label it LD0. Draw a supply curve of labor. Label it LS0. Draw a point at the equilibrium quantity of labor and real wage rate.Draw two new curves that show the effect of the increase in productivity. Label the curves.Draw a point at the new equilibrium quantity of labor and real wage rate. Suppose that the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The _____ the real interest rate, other things remaining the same, the _____ is the supply of labor today. : higher; largerRBC theorists believe the when-to-work effect is large
Real Wages Fail to Match a Rise in ProductivityFor most of the last century, wages and productivitylong dash—the key measure of the economy's efficiencylong dash—