The Real Business Cycle Theory Asserts That Even Slight Changes

Multiple Choice

The real business cycle theory asserts that even slight changes in wages may have a significant impact on output since

A) labor supply is highly sensitive to temporary changes in wage rates
B) even a small wage rate change will induce people to work harder if it is assumed to be permanent
C) wages adjust only slowly, so even a small wage rate change will leave the labor market out of equilibrium for a long time
D) smaller wage rate changes are harder to detect and therefore workers are more likely to make forecasting errors
E) none of the above