According to real business cycle (RBC)theory, a change in the quantity of money leads to
A)a change in the price level but no change in real GDP.
B)a change in the real wage rate and the money wage rate.
C)a change in the price level and in real GDP.
D)a change in investment and real GDP.

Question

Quizplus · Accepted Answer

According to RBC theory, a change in the quantity of money leads to a change in the price level but no change in real GDP. This is because RBC theory assumes that the economy is always at full employment and that changes in the money supply only affect the price level.

According to Real Business Cycle (RBC)theory, a Change in the Quantity