Which of the following is a feature of the 'Real Business Cycle' theory?
A. Fiscal policy is the primary driver of cycles
B. Business cycles are primarily driven by real shocks, especially technology shocks
C. Business cycles are primarily caused by monetary shocks
D. Sticky prices are the main source of fluctuations
Answer: Option B
Solution (By JKSSB Mock Tests)
Real Business Cycle theory attributes macroeconomic fluctuations mainly to real shocks, particularly technological disturbances, under the assumption of continuous market clearing and rational expectations.
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