According to the real business cycle model,
A)changes in money growth cause output fluctuations in both the short run and long run.
B)changes in money growth cause output fluctuation in the long run, but not in the short run.
C)there is no causal link between the money supply and output.
D)most observed changes in the money supply are independent of previous changes in output.

Question

Quizplus · Accepted Answer

According to the real business cycle model, there is no causal link between the money supply and output, meaning that changes in the money supply do not affect output in the short or long run. Rather, output fluctuations are caused by real shocks to the economy, such as changes in technology or changes in consumer preferences.

According to the Real Business Cycle Model