The new classical cycle theory predicts that an unexpected increase in aggregate demand ________
create a business cycle and an expected increase in aggregate demand ________ create a business cycle.
A)will; will
B)will not; will not
C)will; will not
D)will not; will

Question

Quizplus · Accepted Answer

The new classical cycle theory suggests that only unexpected changes in aggregate demand can create business cycles, as expected changes are already accounted for in economic planning.

The New Classical Cycle Theory Predicts That an Unexpected Increase