In RBC models, the government
A)is the main source of business cycles.
B)plays little role in the business cycle.
C)can affect the business cycle through predictable fiscal policy.
D)can affect the business cycle through predictable monetary policy.

Question

Quizplus · Accepted Answer

In Real Business Cycle (RBC) models, the government is typically considered to play a minimal role in the business cycle. These models emphasize real (rather than monetary) shocks and technological changes as the primary drivers of economic fluctuations.

In RBC Models, the Government