The real business cycle theory asserts that changes in lead to changes in .
A) technology; productivity
B) the quantity of money; real GDP
C) consumption expenditure; real GDP
D) animal spirits; real GDP

Question

Quizplus · Accepted Answer

According to the real business cycle theory, changes in technology result in changes in productivity, which in turn affects real GDP. This theory posits that fluctuations in economic activity are primarily the result of productivity shocks, rather than changes in monetary or fiscal policy.

The Real Business Cycle Theory Asserts That Changes in Lead