Real business cycle theory explains variations in prices,employment and output by focusing on
A)changes in real variables such as demand and supply shocks,technological changes,and shifts in the composition of the labour force.
B)anticipated monetary policies enacted by the Bank of Canada.
C)the effects of the Phillips curve.
D)anticipated changes fiscal policy enacted by the government.

Question

Quizplus · Accepted Answer

Real business cycle theory explains fluctuations in the economy as being caused by changes in real variables such as demand and supply shocks, technological changes, and shifts in the composition of the labor force. It argues that these fluctuations are not due to changes in monetary or fiscal policy, but rather reflect the economy's response to different types of shocks.

Real Business Cycle Theory Explains Variations in Prices,employment and Output