What Is Real Business Cycle Theory? What Drives Business Cycles

question 6

Essay

What is Real Business Cycle Theory? What drives business cycles in this model? Where do these shocks come from?

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Definitions:

Approximated

Brought closer together or made to correspond or resemble more closely, often used in reference to making estimates or calculations that are close to the actual values.

Inflammatory Phase

The initial phase of wound healing in which bleeding is reduced as blood vessels in the affected area constrict.

Scar Tissue

Fibrous tissue that replaces normal skin after an injury or surgery, often resulting in a mark or area of skin that's differently textured.

Blood Vessels

Tubes in the body through which blood flows, including arteries, veins, and capillaries, that transport nutrients and oxygen to tissues and remove waste products.