If business cycles are caused by changes in aggregate supply,you would expect to see
A)prices and unemployment moving in the same direction.
B)price and unemployment moving in opposite directions.
C)prices not moving with unemployment.
D)unemployment is not included in the Keynesian model.

Question

Quizplus · Accepted Answer

If business cycles are caused by changes in aggregate supply, then changes in prices and unemployment should move in the same direction. This is because an increase in aggregate supply, for example, would lead to lower prices and more output, which would likely lead to lower unemployment as well. Conversely, a decrease in aggregate supply would lead to higher prices and less output, which would likely lead to higher unemployment as well.

If Business Cycles Are Caused by Changes in Aggregate Supply,you