New classical macroeconomists believe that the predominant factor causing fluctuations in aggregate demand is
A) increases in taxes.
B) instability in the investment function.
C) the weak self-regulating mechanisms of a free enterprise economy.
D) the unstable marginal propensity to consume.
E) erratic and unpredictable government policy.

Question

Quizplus · Accepted Answer

New classical macroeconomists argue that fluctuations in aggregate demand are primarily due to erratic and unpredictable government policy, rather than inherent instability in the economy or consumer behavior.

New Classical Macroeconomists Believe That the Predominant Factor Causing Fluctuations