According to real business cycle theory,money
A)is unnecessary.
B)is neutral.
C)is an important determinant of both short-run and long-run real GDP.
D)affects long-run real GDP only.

Question

Quizplus · Accepted Answer

According to real business cycle theory, money is neutral, meaning that it does not affect long-run real GDP. Real GDP is determined by productivity and technology, not the amount of money in circulation. However, money can still play a role in the short-run fluctuations of the economy due to factors such as changes in money supply, interest rates, and inflation.

According to Real Business Cycle Theory,money