An unexpected decrease in aggregate demand will trigger a recession in the theory of the business cycle.
A) new classical cycle
B) new Keynesian cycle
C) Keynesian cycle
D) Both answers A and B are correct.

Question

Quizplus · Accepted Answer

Both the new classical and new Keynesian cycles acknowledge that unexpected decreases in aggregate demand can lead to recessions, though they differ in their explanations and policy implications.

An Unexpected Decrease in Aggregate Demand Will Trigger a Recession