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in the rbc model if there are no changes to long run economic growth and velocity...

in the rbc model if there are no changes to long run economic growth and velocity had not changes what is a likely cause of inflation? a. quantitative easing b. quantitative tightening c. increased producer confidence d. expansionary monetary policy

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Answer #1

Option D.

In the RBC Model where the business cycles in the economy are attributed mainly to the real shocks in the economy, if there are no changes in the long run economic growth and velocity in the system has also not changed, the main cause of inflation in the economy is expansionary monetary policy where money supply in the economy is increased which will only increase price level in the economy with no chage in the log run economic growth according to the RBC Model.

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