Real-business-cycle theory views changes in resource availability and technology as shifting
aggregate demand and thus causing macroeconomic instability.

Question

Quizplus · Accepted Answer

Real-business-cycle theory posits that fluctuations in aggregate output are primarily driven by changes in technology and other supply-side factors, rather than shifts in aggregate demand. It argues that these fluctuations reflect efficient responses to changes in real economic conditions, rather than macroeconomic instability caused by inadequate aggregate demand.

Real-Business-Cycle Theory Views Changes in Resource Availability and Technology as Shifting