The factor that leads to business cycles in the real business cycle theory is changes in
A) the growth rate of productivity.
B) expected aggregate demand.
C) expected future sales and profits.
D) the growth rate of the quantity of money.

Question

Quizplus · Accepted Answer

The real business cycle theory attributes business cycles to changes in the growth rate of productivity, which affect the availability of resources for production and ultimately impact output levels. Factors such as technological progress, changes in supply shocks, and variations in labor supply are all believed to impact productivity and can lead to fluctuations in business cycles. Changes in expected aggregate demand, future sales and profits, and the growth rate of the quantity of money are not considered the primary factors that lead to business cycles in this theory.

The Factor That Leads to Business Cycles in the Real