According to the real business cycle model, in the economy's short run equilibrium,
A)inflation must be zero.
B)output is as the full employment level.
C)productivity must be zero.
D)the supply of money must be constant.

Question

Quizplus · Accepted Answer

According to the real business cycle model, in the short run equilibrium, output is at the full employment level. This means that all factors of production are being used efficiently and the economy is operating at its potential output. While inflation and productivity may also play a role in the short run, they are not necessarily required for the model's assumptions to hold. The supply of money may also fluctuate in the short run, but again, this is not a necessary condition for the model to hold.

According to the Real Business Cycle Model, in the Economy's