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

Question

Quizplus · Accepted Answer

Real business cycle theory suggests that changes in productivity are the main factor that leads to business cycle events. This theory argues that fluctuations in productivity reflect changes in the level of technology, labor supply, and other supply-side factors. As a result, changes in productivity can cause fluctuations in output, employment, and other macroeconomic variables.

The Factor That Leads to Business Cycle Events Within Real