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Real Business Cycle (RBC) Theory Predicts That the Main Source

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Real business cycle (RBC) theory predicts that the main source of economic fluctuations is


Definitions:

Real Exchange Rate

The rate at which the goods and services of one country can be exchanged for the goods and services of another, adjusted for inflation.

Net Exports

The value of a country's total exports minus its total imports, representing the net effect of a country's international trade on its economic output.

Government Budget Deficit

The financial situation that occurs when a government's expenditures exceed its revenues, leading to a shortfall that must be financed through borrowing.

Loanable Funds

The total amount of funds available for borrowing in the financial markets, determined by the saving behavior and the monetary policy.

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