According to the real business cycle (RBC)theory, recessions are the result of
A) a fall in growth rate of productivity.
B) an increase in growth rate of the quantity of money.
C) an increase in investment.
D) a decrease in growth rate of the quantity of money.

Question

Quizplus · Accepted Answer

According to the RBC theory, recessions are the result of a fall in the growth rate of productivity. This means that during a recession, the economy is not able to produce as much output as it could before due to factors such as lower levels of innovation, less efficient production methods, or declines in the quality of the labor force. It is believed that these factors can cause a downward spiral in economic activity, leading to further declines in productivity and output.

According to the Real Business Cycle (RBC)theory, Recessions Are the Result