Suppose the data show that an unexpected change in tax rates caused a recent recession. These data support which model of the business cycle?
A) new classical cycle theory
B) new Keynesian cycle theory
C) real business cycle theory
D) Both answers A and B are correct.

Question

Quizplus · Accepted Answer

New classical and new Keynesian cycle theories both consider the impact of unexpected changes, such as tax rates, on the business cycle.

Suppose the Data Show That an Unexpected Change in Tax