Real business cycle theorists maintain that business fluctuations are due to
A) changes in the real money supply.
B) inflexible wages and prices.
C) increases and decreases in government spending.
D) shifts in the aggregate supply curve.
E) variability in household spending decisions on durable goods.

Question

Quizplus · Accepted Answer

Real business cycle theorists believe that business fluctuations are caused by shifts in the aggregate supply curve, primarily due to changes in production technology or changes in the availability of productive resources. This means that business cycles are seen as a natural and efficient response to real economic disturbances, rather than as a result of nominal factors like changes in the money supply or government spending.

Real Business Cycle Theorists Maintain That Business Fluctuations Are Due