In real business cycle theory, ________ are the main source of economic fluctuations.
A)unexpected changes in government expenditure
B)random fluctuations in investment
C)random fluctuations in productivity
D)unexpected changes in the full-employment quantity of labour
E)changes in the quantity of money

Question

Quizplus · Accepted Answer

In real business cycle theory, fluctuations in productivity are considered to be the main source of economic fluctuations. This theory emphasizes that business cycle fluctuations are primarily driven by random changes in the level of technology, natural disasters, and other exogenous shocks to the economy that affect the productivity of workers and capital. These fluctuations in productivity lead to changes in output, employment, and prices, as businesses adjust their production levels in response to changes in demand and supply conditions. The other options listed are not considered to be the main sources of economic fluctuations in this theory.

In Real Business Cycle Theory, ________ Are the Main Source