Real business cycle theory suggests that changes in _____ are the primary cause of business cycles.
A) aggregate demand
B) the growth of factor productivity
C) fiscal policy
D) monetary policy

Question

Quizplus · Accepted Answer

Real business cycle theory suggests that business cycles are primarily caused by changes in factor productivity, such as changes in technology, natural disasters, or other shocks to the economy. This contrasts with Keynesian theory, which emphasizes fluctuations in aggregate demand as the primary driver of business cycles.

Real Business Cycle Theory Suggests That Changes in _____ Are