QuestionJuly 15, 2025

Real business cycle theory suggests the business cycle is caused by: A) discretionary monetary policy. B) fluctuations in the rate of productivity. C) "animal spirits." D) protectionism.

Real business cycle theory suggests the business cycle is caused by: A) discretionary monetary policy. B) fluctuations in the rate of productivity. C) "animal spirits." D) protectionism.
Real business cycle theory suggests the business cycle is caused by:
A) discretionary monetary policy.
B) fluctuations in the rate of productivity.
C) "animal spirits."
D) protectionism.

Solution
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Answer

B) fluctuations in the rate of productivity. Explanation 1. Identify the core concept of Real Business Cycle (RBC) Theory RBC theory attributes business cycle fluctuations primarily to changes in productivity. 2. Match the options with RBC theory Option B, "fluctuations in the rate of productivity," aligns with RBC theory.

Explanation

1. Identify the core concept of Real Business Cycle (RBC) Theory<br /> RBC theory attributes business cycle fluctuations primarily to changes in productivity.<br /><br />2. Match the options with RBC theory<br /> Option B, "fluctuations in the rate of productivity," aligns with RBC theory.
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