The real business cycle model focuses on how
A)wage and price stickiness explains fluctuations in real GDP.
B)the labor theory of value is the best measure of value of a good or service.
C)the Federal Reserve should adopt a monetary growth rule.
D)productivity shocks explain fluctuations in real GDP.

Question

Quizplus · Accepted Answer

The real business cycle model explains fluctuations in real GDP based on productivity shocks, which affect the supply side of the economy. The model suggests that changes in technology, resources, and labor supply are the main drivers of business cycles, rather than wage and price stickiness or monetary policy.

The Real Business Cycle Model Focuses on How