What do proponents of the real business cycle model argue about the short-run aggregate supply curve?
A) That it is vertical
B) That it is positively sloped
C) That it is flat
D) That it is negatively sloped

Question

Quizplus · Accepted Answer

Proponents of the real business cycle model argue that the short-run aggregate supply curve is vertical because they believe that changes in the economy are the result of shifts in the production function rather than changes in demand. As a result, they argue that there are no short-run trade-offs between inflation and unemployment, and that the economy will always return to its natural rate of output in the long run.

What Do Proponents of the Real Business Cycle Model Argue