Real business cycle RBC) theory predicts that the main source of economic fluctuations is
A) rational expectations based on complete information.
B) changes in the growth rate of productivity.
C) sticky money wage rates.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Real business cycle theory posits that economic fluctuations are primarily driven by changes in the growth rate of productivity. This is in contrast to other theories, such as Keynesian theory, which attribute fluctuations to factors such as sticky money wage rates or irrational behavior. Real business cycle theory is based on the idea that economic activity fluctuates naturally as a result of changes in technology, resource availability, and other factors that affect the productivity of workers and firms in the economy.

Real Business Cycle RBC) Theory Predicts That the Main Source