One problem with real business cycle theory is that

A) it is more successful in explaining expansions than in explaining contractions.
B) it relies almost entirely on Keynes’ original ideas, ignoring much of the progress made since then.
C) it treats government officials as well-meaning public servants, despite much evidence to the contrary.
D) it defines “productivity” in a new and not very intuitive way.
E) its models downplay the importance of technological progress in the economy.

ANSWER:

A) it is more successful in explaining expansions than in explaining contractions.