The Keynesian explanation of the business cycle is based on
A) shifts in monetary policy undertaken by the Federal Reserve.
B) the inability of government policy-makers to predict the future course of the economy.
C) fluctuations in business confidence.
D) unstable inflationary expectations.

Question

Quizplus · Accepted Answer

The Keynesian explanation of the business cycle is based on fluctuations in business confidence. According to Keynesian theory, changes in business confidence can lead to changes in investment, which in turn affects aggregate demand and can cause fluctuations in the economy.

The Keynesian Explanation of the Business Cycle Is Based on