Real business cycle theory explains changes in employment and output by focusing on
A) the interaction of fiscal and monetary policies.
B) changes in monetary policy.
C) changes in fiscal policy.
D) changes in productivity.

Question

Quizplus · Accepted Answer

Real business cycle theory attributes changes in employment and output to changes in productivity. This theory suggests that fluctuations in economic activity are due to technology shocks or changes in productivity that affect the level of output that can be produced with a given set of resources.

Real Business Cycle Theory Explains Changes in Employment and Output