Which of the following is a criticism of the real business cycle theory?
A) Real business cycle theory fails to explain the phenomenon of economic growth.
B) Real business cycle theory assumes that money wage rates are sticky.
C) Real business cycle theory believes that productivity changes are caused by technology changes when in fact they are caused by changes in aggregate demand.
D) None of the above are criticisms of real business cycle theory.

Question

Quizplus · Accepted Answer

Real business cycle theory attributes fluctuations in economic activity to technology shocks, but critics argue that it overlooks the role of changes in aggregate demand in driving productivity changes.

Which of the Following Is a Criticism of the Real