A criticism of the real business cycle (RBC) theory is that
A) the money wage rate is flexible.
B) potential GDP does not vary with changes in the quantity of money.
C) productivity fluctuations might be caused by the business cycle.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

RBC theory posits that productivity shocks are the primary cause of economic cycles, but a criticism is that it might be the other way around, with the business cycle affecting productivity.

A Criticism of the Real Business Cycle (RBC) Theory Is