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 suggests that fluctuations in output are primarily caused by changes in productivity, technological innovations, and other supply-side factors. These factors can lead to changes in the economy's productive capacity, shifting the long-run aggregate supply curve and affecting equilibrium output levels.

Real Business Cycle Theory Explains Fluctuations in Output Through