The real business cycle model best explains the procyclicality of the nominal money by
A)uncorrelated money.
B)an unpredictable Bank of Canada.
C)endogenous money.
D)exogenous money.
E)monetary neutrality.

Question

Quizplus · Accepted Answer

The real business cycle model assumes that money is endogenous, meaning that it is determined by economic factors such as the level of output and employment. In this framework, nominal money is procyclical because it responds to changes in real economic activity.

The Real Business Cycle Model Best Explains the Procyclicality of the Nominal