The substitution effect is stronger than the income effect

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How many of the following four business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real wages? Explain your answer briefly in two or three sentences. You can safely assume that the substitution effect is stronger than the income effect.

Reference no: EM131378594

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