According to real business cycle theory, changes in real GDP are caused by
A)increases in aggregate demand.
B)political changes.
C)changes in the consumption level.
D)changes in government spending.
E)changes in technology.

Question

Quizplus · Accepted Answer

Real business cycle theory asserts that fluctuations in real GDP are primarily caused by changes in technology, such as innovations that increase productivity or setbacks that decrease it. Other factors, such as changes in government spending, may have some impact on the economy, but they are seen as less significant compared to technology-driven changes.

According to Real Business Cycle Theory, Changes in Real GDP