Which of the following pieces of evidence is most consistent with the real business cycle theory?
A)Money wage rates take some time to adjust to price changes.
B)Real GDP and the quantity of money move closely together.
C)Labour supply decisions do not seem to depend on real interest rates.
D)Productivity and GDP move closely together.

Question

Quizplus · Accepted Answer

Real business cycle theory emphasizes that fluctuations in productivity are the main source of economic fluctuations, so a close movement between productivity and GDP is consistent with this theory.

Which of the Following Pieces of Evidence Is Most Consistent