Which of the following is a criticism of real business cycle theory?

Question

Quizplus · Accepted Answer

Real business cycle theory believes that productivity changes are caused by technology changes when in fact they can be caused by changes in aggregate demand. This is a criticism because it ignores factors like changes in government policies or monetary policy that can affect productivity levels. Option A is not a criticism because real business cycle theory does explain economic growth as a result of changes in productivity. Option B is not a criticism because real business cycle theory assumes that wages and prices adjust easily to changes in the economy, not that they are sticky. Option D is not correct because there are criticisms of real business cycle theory.

Which of the Following Is a Criticism of Real Business