Which theory distinguishes between expected and unexpected fluctuations in aggregate demand and argues that only unexpected changes can affect real GDP?
A) new classical cycle theory
B) Keynesian cycle theory
C) monetarist cycle theory
D) real business cycle theory

Question

Quizplus · Accepted Answer

New classical cycle theory distinguishes between expected and unexpected fluctuations in aggregate demand, arguing that only unexpected changes can affect real GDP because individuals and businesses can adjust their actions to expected changes.

Which Theory Distinguishes Between Expected and Unexpected Fluctuations in Aggregate