The real business cycle model suggests that,with aggregate demand unchanged,increases in output would be associated with ________.
A)an increase in inflation
B)a decline in inflation
C)and unchanged price level
D)procyclical inflation

Question

Quizplus · Accepted Answer

The real business cycle model posits that output changes are driven by real (supply-side) shocks, not demand-side factors, so an increase in output would typically lead to a decline in inflation due to increased supply.

The Real Business Cycle Model Suggests That,with Aggregate Demand Unchanged,increases