Real business cycle theory a. emphasizes the role of sentiments that create the self-fulfilling prophecies that drive economic fluctuations. b. explains how monetary factors drive business cycles. c. explains how initial economic shocks are amplified through the multiplier process. d. emphasizes the role of changing productivity and technology in causing economic fluctuations.

Varto company has 9,400 units of its sole product in inventory that it produced last year at a cost of $23 each. this year’s model is superior to last year’s, and the 9,400 units cannot be sold at last year’s regular selling price of $42 each. varto has two alternatives for these items: (1) they can be sold to a wholesaler for $8 each, or (2) they can be reworked at a cost of $251,100 and then sold for $34 each. prepare an analysis to determine whether varto should sell the products as is or rework them and then sell them.