Which of the following is not a characteristic of the real business cycle theory?
Staggering price is not a characteristic of real business cycle theory. Real business cycle models explain fluctuations through real shocks and market-clearing adjustments,…
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Which of the following is not a characteristic of the real business cycle theory?
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Correct answer D
Staggering price is not a characteristic of real business cycle theory. Real business cycle models explain fluctuations through real shocks and market-clearing adjustments, including intertemporal substitution of labour; staggered price adjustment belongs to models with nominal rigidities.
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West Bengal SET (WB SET)