Real Business Cycles (RBC) theory views cycles as arising in frictionless perfectly competitive economies with generally complete markets subject to real shocks (random changes in technology or productivity), it makes the argument that cycles are consistent with competitive general equilibrium environments in which all agents are rational maximizers. "In this case, the observed fluctuations in GNP are fluctuations in the natural (trend) rate of output, not deviations of output from a smooth determinist trend." (Snowdon) Typically RBC models have the following features: