According to the real business cycle model
A)increases in aggregate demand raise GDP.
B)increases in aggregate demand lower GDP.
C)increases in aggregate demand do not affect GDP.
D)increases in aggregate demand lower the price level.

Question

Quizplus · Accepted Answer

According to the real business cycle model, economic fluctuations are primarily caused by changes in technology and productivity, rather than fluctuations in aggregate demand. Therefore, increases in aggregate demand do not significantly affect GDP in the long run.

According to the Real Business Cycle Model