The key defect of the real business cycle model and the coordination failure model, in explaining what was going on in the 2008-2009 recession, is
A) the failure to recognize important features of the economy.
B) the fact that financial factors are too important in these models.
C) the absence of a role for government spending.
D) too much attention to international trade.
E) no effect of central bank actions on the price level in these models.

Question

Quizplus · Accepted Answer

The real business cycle model and the coordination failure model do not adequately account for financial market disruptions, which were crucial in the 2008-2009 recession.

The Key Defect of the Real Business Cycle Model and the Coordination