According to the real business cycle model, increases in aggregate demand:
A)raise GDP.
B)lower GDP.
C)do not affect GDP.
D)lower the price level.

Question

Quizplus · Accepted Answer

In the real business cycle model, increases in aggregate demand do not affect GDP because the model assumes that the economy is always at full employment and output is determined by real factors like technology and labor supply, not by aggregate demand.

According to the Real Business Cycle Model, Increases in Aggregate