According to the real business cycle model, changes in the money supply will affect economic activity
A)in neither the short run nor the long run.
B)in the short run, but not the long run.
C)in the long run, but not the short run.
D)in both the short run and the long run.

Question

Quizplus · Accepted Answer

The real business cycle model posits that economic fluctuations are primarily driven by real (not monetary) factors, such as changes in technology or productivity. Therefore, it suggests that changes in the money supply do not affect economic activity in either the short run or the long run.

According to the Real Business Cycle Model, Changes in the Money