Which of the following theories of business cycles implies that efficient markets,characterized by perfect information and by rational business firms and households,will still be characterized by business cycles?
A)Lucas's rational expectation model
B)the natural rate hypothesis
C)the real business cycle model
D)classical theory

Question

Quizplus · Accepted Answer

The real business cycle model suggests that business cycles are driven by real (not monetary) shocks, such as changes in technology or productivity, even in efficient markets with rational agents.

Which of the Following Theories of Business Cycles Implies That