The model that focuses on how productivity shocks explain fluctuations in real GDP is the
A) monetarist model.
B) real business cycle model.
C) new classical model.
D) new Keynesian model.

Question

Quizplus · Accepted Answer

The real business cycle model focuses on how productivity shocks (i.e. changes in technology, natural resources, and labor productivity) explain fluctuations in real GDP. It holds the view that business cycles are mainly driven by variations in productivity and that government intervention in the economy is not necessary.

The Model That Focuses on How Productivity Shocks Explain Fluctuations