What is "real business cycle theory?"
A) outside shocks disrupt the economy and require government action to stabilize expectations.
B) the most important shocks to the economy come from technological change.
C) the most important shocks to the economy come from government policy mistakes.
D) business cycles are caused by the internal dynamics of capitalism.

Question

Quizplus · Accepted Answer

Real Business Cycle Theory posits that the primary cause of economic fluctuations and business cycles is technology shocks, rather than monetary or demand shocks. This theory suggests that technological innovations and changes significantly impact productivity, leading to expansions and contractions in the economy.

What Is "Real Business Cycle Theory