A macroeconomic theory that stresses the fact that shifts in potential GDP are a primary cause of fluctuations in real GDP is known as

Question

Quizplus · Accepted Answer

Real business cycle theory emphasizes that fluctuations in real GDP are largely caused by shifts in potential GDP rather than changes in aggregate demand or other macroeconomic factors. This theory asserts that technological shocks or changes in productivity levels are the primary drivers of business cycles.

A Macroeconomic Theory That Stresses the Fact That Shifts in Potential