In the RBC model,actual real GDP is
A)never equal to the natural real GDP.
B)equal to the natural real GDP when P = Pe.
C)equal to the natural real GDP when P is equal to or greater than Pe.
D)always equal to the natural real GDP.

Question

Quizplus · Accepted Answer

In the Real Business Cycle (RBC) model, actual real GDP is always equal to the natural real GDP because the model assumes that all fluctuations in GDP are due to real (supply-side) shocks, and there are no demand-side deviations from potential output.

In the RBC Model,actual Real GDP Is