Which of the following changes would not be considered a likely source of changes in Real GDP according to real business cycle theory?

Question

Quizplus · Accepted Answer

Real business cycle theory focuses on changes in productivity due to real shocks such as technological changes, changes in the availability of resources, and changes in preferences of consumers. Monetary policy, which affects the money supply, is not considered a real shock in this theory, but rather a nominal shock that affects only nominal variables such as prices and inflation. Therefore, a change in the money supply would not be considered a likely source of changes in Real GDP according to real business cycle theory.

Which of the Following Changes Would Not Be Considered a Likely