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Does the neoclassical growth model explain why business cycles occur? Why or why not? Yes, it does because it shows how economic growth changes when

Does the neoclassical growth model explain why business cycles occur? Why or why not?

  1. Yes, it does because it shows how economic growth changes when the factors of production (capital, labour force and technology) change.
  2. No, it does not because it is more focused on government activity than private sector activity.
  3. No, it does not because it does not take into account technology changes.
  4. Yes, even though it is a long run model, it captures business cycles because they can be seen to occur over very long periods of time.
  5. No, it does not because it only illustrates long term trends in GDP per capita.

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