When economists use the term real business cycle theory they are suggesting that business cycles are caused by ?
Correct answer: A. Shifts in aggregate supply
- A. Shifts in aggregate supply
- B. changes in export demand due to the state of the world economy
- C. business confidence
- D. business expectations
Explanation
Real business cycle theory attributes fluctuations mainly to real supply-side shocks, such as changes in technology or productivity. These shift aggregate supply rather than originating primarily from confidence or demand.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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