Question

Real business cycle theory argues that money is very unimportant and that economic fluctuations are due...

Real business cycle theory argues that money is very unimportant and that economic fluctuations are due largely to changes in technology.Explain

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer

Real business-cycle theory is one in which business-cycle fluctuations to a large extent can be accounted for by real technological shocks. According to this theory, government should concentrate on long-run structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth out economic short-term fluctuations. It shows that this theory does not believe money or money supply to have much of an impact in the economy .

Real business cycle theory rejects Keynesian economics and the effectiveness of monetary policy as promoted by monetarism and New Keynesian economics.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain which business cycle theory, if Real business cycle or Keynesian Coordination failure model with or...
Explain which business cycle theory, if Real business cycle or Keynesian Coordination failure model with or without sticky prices, subscribes to each one of the following 1) Workers are worried about their position relative to other workers, and do not accept wage cuts in recessions. 2) Business cycles are caused by misguided government policies. 3) Business cycles are driven by changes in aggregate demand, which are, in turn, caused by fluctuations in government spending.
According to a real business cycle model, fluctuations in output are more likely driven by forces...
According to a real business cycle model, fluctuations in output are more likely driven by forces such as technology shocks, as opposed to nominal changes in monetary policy: A.true B.false
Real business cycle theory suggests the business cycle is caused by: Select one: a. discretionary monetary...
Real business cycle theory suggests the business cycle is caused by: Select one: a. discretionary monetary policy. b. “animal spirits.” c. protectionism. d. fluctuations in the rate of productivity. The school of thought that monetary policy should be the main tool of stabilization policy, that is skeptical about the use of fiscal policy, and that recognizes constraints on policy imposed by the natural rate of unemployment and the political business cycle is: Select one: a. classical macroeconomics. b. the Great...
According to RBC​ theory, what is the source of the business​ cycle? What is the role...
According to RBC​ theory, what is the source of the business​ cycle? What is the role of fluctuations in the rate of technological​ change? According to RBC​ theory, the source of the business cycle is​ _______, which result mainly from​ _______. A. fluctuations in business​ confidence; fluctuations in aggregate demand B. rational expectations of the price​ level; unexpected fluctuations in aggregate demand C. fluctuations in​ productivity; fluctuations in the pace of technological change D. fluctuations in investment and​ consumption; fluctuations...
a) The business cycle model shows short-term fluctuations in the level of economic activity along a...
a) The business cycle model shows short-term fluctuations in the level of economic activity along a long-term trend. Examine the two business cycle phases that can occur in a nation. ANSWER: b) Suppose the Following information was published by Happy land Republic in 2017: Item Amount (AUD billion) Household consumption 1029.81 Government consumption 340.92 Exports 386.39 Gross private domestic investment 352.69 Imports 386.95 Government investment 88.19 Use the information to calculate Happy land Republic’s GDP in 2017.
31. In "real business cycle theory", an expansion is caused by a. an increase in productivity....
31. In "real business cycle theory", an expansion is caused by a. an increase in productivity. b. an increase in employment. c. an increase in ináation. d. All of the above.
1. Which of the following is an assumption of real business cycle theory? A prices or...
1. Which of the following is an assumption of real business cycle theory? A prices or wages are sticky (inflexible); B money’s velocity is stable and predictable C technology (supply-side) shocks are the primary cause of business cycles D business cycles are caused by a mismatch in timing between savings, investment, and consumption 2. Which of the following is an assumption of New Keynesian theory? A prices or wages are sticky (inflexible) B money’s velocity is stable and predictable C...
In the real business cycle theory, during a period when output is falling a.   workers are...
In the real business cycle theory, during a period when output is falling a.   workers are voluntarily giving up their jobs. b.   the quantity supplied of labor is falling. c.   aggregate productivity must be falling. d.   all of the above. e.   none of the above. Explain answer briefly.
10.15 What is the most important/critical/defining assumption made by the real business cycle wing of classical...
10.15 What is the most important/critical/defining assumption made by the real business cycle wing of classical theory that clearly distinguishes the theory AND, in turn, justifies their laissez-faire policy recommendations?
In the Austrian View of the Business Cycle, a genuine increase in economic growth must be...
In the Austrian View of the Business Cycle, a genuine increase in economic growth must be supported by an increase in Select one: a. The money supply. b. Government spending. c. Consumption. d. Saving.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT