The factor that leads to business cycle events within real business cycle theory is represented by
A) changes in growth rate in productivity.
B) changes in the growth rate in the quantity of money.
C) adverse shocks to international trade.
D) changes in expected future sales and profits of firms.

Question

Quizplus · Accepted Answer

Real business cycle theory emphasizes the role of productivity shocks as the main cause of business cycle fluctuations. When there are changes in productivity growth, there are changes in the supply of goods and services, causing changes in output and employment levels.

The Factor That Leads to Business Cycle Events Within Real