Real business cycle theory says that the factor leading to the business cycle is changes in

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Real business cycle theory argues that business cycles are caused by changes in productivity. Specifically, fluctuations in productivity lead to changes in aggregate supply, which in turn affects output, employment, and other macroeconomic variables. This theory emphasizes the importance of technology shocks and other real factors in driving economic fluctuations, rather than changes in aggregate demand or nominal variables.

Real Business Cycle Theory Says That the Factor Leading to the Business