Of the four models of the business cycle,which model's implication concerning the change in real wages during recessions is consistent with actual observed changes in real wages during recessions?
A)the Real Business Cycle theory
B)the Friedman-Phelps-Lucas Model
C)the Keynesian Model
D)None of the above.

Question

Quizplus · Accepted Answer

The Real Business Cycle (RBC) theory suggests that real wages are pro-cyclical, meaning they tend to rise during economic expansions and fall during recessions. This is consistent with observed changes in real wages during recessions, where real wages often decrease.

Of the Four Models of the Business Cycle,which Model's Implication