Which theory assumes that business cycles occur because of changes in business confidence?
A) Keynesian cycle theory
B) real business cycle theory
C) new classical cycle theory
D) monetarist cycle theory

Question

Quizplus · Accepted Answer

Keynesian cycle theory suggests that business cycles occur due to changes in business confidence, which affects investment and overall economic activity. This theory emphasizes the role of government intervention in stabilizing the economy during downturns. Real business cycle theory suggests that business cycles are driven by fluctuations in productivity, while new classical cycle theory emphasizes the role of changes in expectations and information in shaping economic activity. Monetarist cycle theory emphasizes the role of changes in the money supply in driving economic cycles.

Which Theory Assumes That Business Cycles Occur Because of Changes