In the aggregate production function Y = A ,real business cycle theory treats ________ as the key independent variable.
A)potential output
B)productivity
C)the capital stock
D)the labor input

Question

In the aggregate production function Y = A   ,real business cycle theory treats ________ as the key independent variable.
A)potential output 
B)productivity 
C)the capital stock 
D)the labor input

Quizplus · Accepted Answer

Real business cycle theory focuses on productivity as the key independent variable in the aggregate production function, as it is seen as the primary driver of fluctuations in economic activity. potential output (A) is a result of productivity, not an independent variable that drives it. While the capital stock (C) and the labor input (D) are important inputs in the production function, real business cycle theory emphasizes the fluctuations in productivity as the primary driver of economic cycles.

In the Aggregate Production Function Y = a