The real-business-cycle theory holds that business ﬂuctuations are caused by
A) factors affecting aggregate demand.
B) incorrectly anticipated government stabilization policies.
C) signiﬁcant changes in technology and resource availability.
D) "stop-and-go" monetary policies.

Question

Quizplus · Accepted Answer

The real-business-cycle theory holds that business fluctuations are caused by significant changes in technology and resource availability. It suggests that changes in productivity, as a result of advances in technology or changes in available resources, can cause fluctuations in output and employment levels. It does not focus on factors affecting aggregate demand, incorrectly anticipated government stabilization policies, or "stop-and-go" monetary policies as the primary causes of business fluctuations.

The Real-Business-Cycle Theory Holds That Business ﬂUctuations Are Caused by