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MENTAL MODEL · M3513

Real Business Cycle Theory

Real Business Cycle Theory
BusinessHigh supportMacroeconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

A new classical macroeconomic theory that holds that economic fluctuations mainly originate from real shocks (such as technological changes, resource changes) rather than monetary factors. Economic agents respond rationally to these shocks through optimizing behavior, and the market is always in equilibrium.

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Analysis of economic fluctuations. It provides a theoretical framework for understanding the sources of economic fluctuations. In policy discussions, it emphasizes the effectiveness of market mechanisms and questions the necessity of active intervention policies, but also acknowledges that in reality markets may have frictions and imperfections.

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It holds that economic fluctuations are mainly driven by real (actual) shocks—random fluctuations in technological progress, changes in resources or preferences; rational agents optimize their behavior accordingly, and the market remains in general equilibrium. Money is neutral, and fluctuations are seen as efficient resource reallocation rather than market failure.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Real_business-cycle_theoryZH · Explicit
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