Real business cycle theory explains fluctuations in output through:
A)Changes in aggregate demand
B)Changes in productivity
C)Shifts of the short-run aggregate supply curve
D)Changes in monetary policy

Question

Quizplus · Accepted Answer

Real business cycle theory explains fluctuations in output as being driven by changes in productivity, such as changes in technology or changes in the availability of resources, rather than fluctuations in aggregate demand or changes in monetary policy. Shifts of the short-run aggregate supply curve may also play a role in this theory, but it is ultimately rooted in changes in productivity.

Real Business Cycle Theory Explains Fluctuations in Output Through