Economics • Economic BasicsHard
In neoclassical macroeconomics, what does the 'Real Business Cycle (RBC)' theory attribute economic fluctuations to?
A. Monetary shocks and sticky wages managed by central banks
B. Real shocks such as technological changes and productivity shifts✓ Correct Answer
C. Animal spirits and sudden shifts in aggregate consumer confidence
D. Government fiscal stimulus packages and deficit spending
💡 Solution & Explanation
Real Business Cycle theory asserts that economic fluctuations stem from real supply-side shocks, particularly technological innovations and productivity shifts, rather than nominal monetary forces. Other perspectives like Keynesian economics emphasize aggregate demand and animal spirits, whereas monetarism focuses on money supply changes. This school assumes markets clear rapidly through flexible wages and prices.
More Economics Economic Basics questions
- What does the 'Laffer Curve' graphically illustrate in public economics?
- Which of the following best defines the concept of 'Quasi-Rent' in economics?
- Which microeconomic concept describes the situation where an individual's utility function exhibits a…
- Which of the following economic concepts refers to the market condition where a small number of…
- In the theory of international trade, which theorem states that an increase in the endowment of one factor of…