Suppose there is an oil supply shock to the Canadian economy due to an embargo.According to the real business cycle theory,the supply shock

Question

Quizplus · Accepted Answer

Real Business Cycle Theory suggests that the economy naturally returns to its trend growth path in the long run, implying that temporary shocks, such as an oil supply shock, do not have long-term effects on the labor market.

Suppose There Is an Oil Supply Shock to the Canadian