In real business cycle models,shifts of the aggregate demand curve ________.
A)cause changes in inflation,but have no effect on output
B)cannot occur
C)result from changes in the willingness to work
D)result from Solow residuals

Question

Quizplus · Accepted Answer

In real business cycle models, shifts in the aggregate demand curve are typically associated with changes in inflation but are considered to have no effect on the real output in the long run. This is because these models often emphasize supply-side factors, like technology changes, as the primary drivers of economic fluctuations, assuming that the economy is always at or returns quickly to full employment.

In Real Business Cycle Models,shifts of the Aggregate Demand Curve