Aparna Lucknow, India 601 Questions 0 Answers 0 Best Answers 678 Points View Profile Aparna Asked: September 30, 20212021-09-30T17:51:40+05:30 2021-09-30T17:51:40+05:30In: Economics What is Real Business Cycle theory? What is Real Business Cycle theory? key economy terms Share Facebook 1 Answer Recent Rahul 0 Questions 518 Answers 176 Best Answers 2k Points View Profile Best Answer Rahul BRIGHT 2021-09-30T17:53:15+05:30Added an answer on September 30, 2021 at 5:53 pm Real Business Cycle theory An economy witnesses a number of business cycles in its life. These business cycles involve phases of high or even low level of economic activities. A business cycle involves periods of economic expansion, recession, trough and recovery. The duration of such stages may vary from case to case. The real business cycle theory makes the fundamental assumption that an economy witnesses all these phases of business cycle due to technology shocks. Technological shocks include innovations, bad weather, stricter safety regulations, etc. 0 Reply Share Share Share on Facebook Share on Twitter Share on WhatsApp Leave an answerCancel replyYou must login or register to add a new answer. Related Questions What is Spot Price? What is Sovereign Risk?