The primary source of shocks to potential output and long-run supply for real business cycle theorists is ________.
A)changes in the money supply
B)a change in the price of complements
C)a change in any of the components of aggregate demand
D)shocks to productivity

Question

Quizplus · Accepted Answer

Real business cycle theorists believe that shocks to productivity are the primary source of fluctuations in the economy's potential output and long-run supply. These shocks can arise from a variety of factors, including changes in technology, weather patterns, natural disasters, and government policies. Real business cycle theorists believe that these shocks are the driving force behind economic fluctuations, and that government intervention to stabilize the economy is often unnecessary and can even be harmful.

The Primary Source of Shocks to Potential Output and Long-Run